Coterra Energy (CTRA) PT Raised to $36 at JPMorgan

JPMorgan analyst Arun Jayaram raised the price target on Coterra Energy (NYSE: CTRA) to $36.00 (from $35.00) while maintaining a Overweight rating.

The analyst comments "with another sizeable oil and gas volume beat, while exhibiting strong capital efficiency. Despite what we perceived was an upbeat 2025 guide, CTRA shares have lagged the XOP Index by 100bps since the print as we think the underperformance is related to short-sighted concerns on the weaker 1Q25 guide and perhaps the back-end loaded of buyback activity in 2025. Optically, the 1Q25 oil guide did come in -9% below JPMe/STe, but this variance is largely driven by the timing of the close of the Delaware Basin asset transactions, TIL timing, and the pull-forward of some activity to 4Q24. We sense opportunity on the long side as we think the myopic focus on the 1Q25 guide is missing the fact that the overall guide was better than expected as the company maintained its pro forma guide of 160 MBo/d of oil despite a 4 MBo/d headwind from the January 27 close date for Franklin Mountain/Avant. Meanwhile, the company looks poised to drive valued added growth over the next 3 years at range bound capex. CTRA now expects to deliver more than 5% annual oil growth from 2025-27, including 0-5% growth for BOEs and natural gas while investing $2.1- $2.4 B per annum in capex. The big news from the print was CTRA’s plan to lean into some gas activity given the sharp improvement in the macro picture, with the company reallocating ~$50 MM of the $70 MM of Permian capex savings to their Marcellus development program that should yield volumes in early 2026 to capture winter pricing. Management cited that it could lean further into incremental gas spend later this year based on the macro picture."

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