Southwestern Energy double-upgraded at Wolfe Research as nat gas pullback provides ‘buying opportunity’

Wolfe Research double-upgraded shares of Southwestern Energy (NYSE:) to Outperform from Underperform in a note Friday, maintaining an $8 price target on the stock.

Analysts told investors that the company’s shares are priced for an entry point following the nat gas pullback.

“Since the winter, the nat gas rig count collapsed and gas demand has been supported y/y by power, industrial recovery, and higher LNG imports. L48 gas production is still very high, and so shoulder season volatility is elevated and after a recent pullback, 1Q24 HH prices are at ytd lows,” the analysts explained.

“We believe this is a buying opportunity ahead of more visible production declines in L48,” the analysts added.

They believe winter weather will be the determining factor. They added that with production declining and days cover of storage at normal levels, they believe gas skew is to the upside.

“SWN’s flat capex profile for FY24 yields 2H production ramp into a better balanced FY25 market, and its relative EV/EBITDA discount is no longer warranted,” the analysts wrote.