EQT Corporation Upgraded to Buy by Citi

Citi analysts have upgraded EQT Corporation to a Buy rating from Neutral, citing a more promising outlook for the U.S. gas market in 2025.

The bank indicated that the macroeconomic conditions for natural gas are becoming more favorable, with tightening supply and demand dynamics likely resulting in higher gas prices.

Citi emphasized that low-cost producers are poised to succeed in the Energy sector, highlighting EQT’s advantageous position to benefit from these changes.

Several growth catalysts for EQT were mentioned, such as near-term asset sales and debt reduction, along with improving base decline rates and lower maintenance capital expenditures in the long run.

The analysts noted that EQT is aiming for two asset sales, potentially generating around $4 billion in cash to help decrease its debt.

Moreover, two liquefied natural gas (LNG) facilities, Plaquemines and CCIII, are expected to significantly increase gas demand by 3-4 billion cubic feet per day in 2025.

With power generation on a consistent growth trajectory, Citi anticipates steady demand for natural gas in the years ahead, forecasting a price of $4.20 per MMBtu for 2025.

Additionally, Citi pointed out EQT’s investments in compression technology, which are projected to lower base decline rates and cut maintenance capital expenditures by up to $450 million in 2025.

A reduction of 5-7.5 percentage points in the base decline rate could reduce EQT’s annual capital expenditures by between $300 million and $450 million.

With a revised price target of $44, raised from $37, Citi views EQT’s robust cash flow generation and scale as factors that position it as a leader in the U.S. natural gas market as it moves into 2025.