Deutsche Bank (DB) started coverage of natural gas producer EQT Corp. (NYSE:EQT) with a "Hold" rating and price target of $64.
Stephen Richardson, an analyst at DB, said EQT is executing a funding
strategy that permits acceleration, potentially driving upward
revisions to NAV. Key for the stock will be whether the deteriorating
gas strip will discourage acceleration, given management’s stewardship
of corporate returns.
"Current downside appears insulated by asset quality, but with
uncertainty surrounding the commodity outlook and the pace and timing of
acceleration we initiate with a HOLD rating," Richardson wrote in a
note.
'While we believe the asset quality story at EQT is well understood
(high quality Marcellus position with attractive tenure and royalty
terms), we see the accelerated development case is key for sustained
outperformance for the stocks from current levels," Richardson said.
While Marcellus producers are well positioned for a low price
environment, Richardson said sustained weakness should see a slowdown in
drilling.
EQT, formerly Equitable Resources Inc., is currently trading 1.9 percent lower at $46.72.
