On Thursday, Mizuho Securities updated its valuation model for Antero Resources (NYSE:AR), resulting in a slight increase in the company's price target. The new stock target is set at $28.00, up from the previous $27.00, while the firm maintained a Neutral rating on the stock.
The adjustment reflects the year-end 2023 reserves and the guidance provided for 2024. Antero Resources has demonstrated robust performance in terms of capital efficiency and well productivity throughout 2023. The company's budget for 2024 further strengthens its position by reducing maintenance spending by approximately $100 million annually.
In addition to the budget adjustments, Mizuho Securities has raised its Marcellus type curve by about 5% to account for the observed improvements in well productivity. The stock has recently seen a notable performance, surpassing its peers, which is attributed to the strengthening fundamentals in natural gas liquids (NGLs), with a specific emphasis on propane.
Despite these positive developments, the firm notes that the potential for further earnings growth may be limited by Antero Resources' higher cost structure. This limitation could persist unless there is an improvement in gas prices.
Consequently, even with the net asset value (NAV) per share increasing to $28 from $27, the stock's upside remains below 10%, which is modest compared to peers like CHK and RRC, who exhibit over 20% upside. Therefore, Mizuho Securities continues to recommend a Neutral stance on Antero Resources shares.
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