UBS Cuts Price Target on CONSOL Energy (CNX) Under New Natural Gas Forecast

UBS maintained a Neutral rating on CONSOL Energy (NYSE: CNX), and cut the price target to $7.00 (from $9.00). Under the new natural gas forecast, UBS' energy team estimates only parts of the northeast Marcellus in the US will be economic at the wellhead for new investment. Hence, UBS expects CNX to minimize completions and any drilling activity in 2016.

Analyst Matt Murphy commented, "UBS has lowered its 2016-19 and long-term gas price forecast and now expects prices to average $2.45/MMBTU in 2016, $2.75 in 2017, $3.00 in 2018, and $3.25/MMBTU in 2019+. The cuts reflect slightly weaker expectations for demand growth driven by competition from renewables in the electric power sector, offsetting a reduced gas supply growth forecast. We have cut our long-term price to reflect the robustness of production growth and the view that $3.25/MMBTU will incentivize enough growth from higher cost basins to meet incremental long-term demand growth. UBS has also cut 2016/17 WTI prices ~20% to $40 and $52/bbl respectively. This cut is less meaningful to CNX as it continues to have a dry gas production tilt in 2016."

For an analyst ratings summary and ratings history on CONSOL Energy click here. For more ratings news on CONSOL Energy click here.

Shares of CONSOL Energy closed at $6.70 yesterday.

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