On Wednesday, JPMorgan (NYSE:JPM) analyst Arun Jayaram revised the price target for Coterra Energy (NYSE:CTRA), reducing it to $32.00 from the previous $34.00, while continuing to recommend an Overweight rating for the stock. With shares currently trading at $22.93, near its 52-week low of $22.30, InvestingPro analysis suggests the stock is undervalued, aligning with JPMorgan’s bullish stance. The company maintains a moderate P/E ratio of 14.7x and offers a dividend yield of 3.84%. The adjustment comes after Coterra Energy announced a 4% decrease in its fiscal year 2025 capital expenditure (capex) expectations. The company plans to remove three Permian rigs in the second half of 2025 in the Delaware Basin, impacting capex by approximately $120 million. However, Coterra Energy intends to increase activity modestly in the Marcellus region, adding around $50 million in capex.
Coterra Energy has updated its capex guidance to $2.2 billion, which is slightly lower than the prior estimate of $2.3 billion. Despite the reduction in activity, the company has maintained its fiscal year 2025 oil production guidance, with the midpoint remaining at 160 thousand barrels of oil per day (MBo/d). The $17.52 billion market cap company has demonstrated solid operational performance, with revenue growth of 6.25% over the last twelve months. InvestingPro subscribers have access to detailed financial health metrics and 8 additional key insights about Coterra Energy’s performance and outlook. However, second-quarter oil volumes came in 8% below expectations, in part due to operational challenges in the Harkey interval.
As a result of these developments, JPMorgan has lowered its 2025 oil production forecast for Coterra Energy to 159.8 MBo/d from 162.7 MBo/d. Nevertheless, the firm anticipates that the company will achieve its guidance midpoint, projecting an increase in oil production to 168.4 MBo/d and 174.5 MBo/d in the third and fourth quarters of 2025, respectively, with a capex of $2.14 billion. Looking ahead to 2026, JPMorgan models oil output at 173 MBo/d with a capex of $2.3 billion. These forecasts are based on a reinvestment rate of 53% for 2025 and 52% for 2026, given recent strip pricing.
In light of the first-quarter earnings report and recent strip pricing, JPMorgan has reiterated its Overweight rating on Coterra Energy shares. The firm encourages investors to consider buying shares on any price weakness, with the revised December 2025 price target now set at $32. Analysts expect the company to remain profitable with a forecasted EPS of $2.75 for FY2025. For deeper insights into Coterra Energy’s valuation and growth prospects, investors can access the comprehensive Pro Research Report available on InvestingPro, which includes detailed analysis of the company’s financial health and future potential.
In other recent news, Coterra Energy Inc. reported its Q1 2025 earnings, surpassing analysts’ expectations with an earnings per share (EPS) of $0.80, compared to the forecasted $0.74. However, the company’s revenue fell slightly short, coming in at $1.9 billion against a forecast of $1.92 billion. Despite the earnings beat, Coterra Energy announced plans to reduce capital expenditures for 2025, while maintaining a focus on debt reduction and operational efficiency. The company also highlighted its ongoing efforts to integrate recent acquisitions and improve operational efficiencies. Analysts are keeping a close watch on Coterra Energy, as Wolfe Research and Barclays (LON:BARC) have shown interest in the company’s handling of mechanical issues in well development, which were addressed during an earnings call. Coterra Energy remains committed to maintaining its production guidance for the year, with plans to produce between 720-770 MBOE per day. Additionally, the firm plans to fully repay a $1 billion term loan by the end of 2025, reinforcing its focus on financial stability.
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