On Friday, Mizuho Securities updated its outlook on Range Resources Corp (NYSE:RRC), a natural gas and NGL producer, by increasing its price target to $41 from the previous $39 while maintaining a Buy rating on the stock. This adjustment follows the company's first-quarter earnings for 2024.
The firm's decision to raise the price target is based on a revised model that takes into account Range Resources' reported earnings. The analyst highlighted the company's conservative approach compared to its peers, who are expecting significant demand growth for natural gas and NGLs from various sectors, including LNG, electrification, AI data centers, Chinese petrochemicals, and coal retirements.
Despite a more cautious outlook on demand growth, such as anticipating only 1 billion cubic feet per day (bcf/d) increase by 2030 from AI data center power generation, Range Resources is recognized for its solid execution, deep inventory, premium NGL pricing, and a strong hedge book. These factors are anticipated to contribute to the company generating approximately $400-500 million in free cash flow (FCF) in 2024.
The analyst from Mizuho Securities reaffirmed the Buy rating, signaling confidence in Range Resources' market position. The company's ability to generate significant free cash flow while others in the industry are only breaking even was cited as a key differentiator that supports the positive outlook.
The increase in the net asset value (NAV)-based price target to $41 reflects the firm's updated assessment of Range Resources' value and prospects. The analyst's comments underscore the belief that the company's financial and operational strategies will continue to set it apart from competitors in the natural gas sector.
InvestingPro Insights
As Mizuho Securities raises its price target for Range Resources Corp (NYSE:RRC), recent data from InvestingPro aligns with the optimistic outlook. The company's market capitalization stands at a robust $9.15 billion, with a current P/E ratio of 18.65, suggesting investor confidence in its earnings potential. Notably, the company's price is hovering near its 52-week high, at 98.59% of this peak, reflecting a strong market sentiment.
InvestingPro Tips reveal that Range Resources has experienced a strong return over the last month and quarter, with price total returns of 13.75% and 26.27%, respectively. This performance is indicative of the company's solid market presence and aligns with Mizuho's positive outlook. Additionally, the company's moderate level of debt and profitability over the last twelve months provide a stable financial foundation for future growth. For readers looking to delve deeper into Range Resources' prospects, there are over 12 additional InvestingPro Tips available, offering a comprehensive analysis for informed investment decisions.
To access these insights and more, consider using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro. The company's next earnings date is set for July 22, 2024, which could provide further indication of its trajectory and potential investment opportunities.
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