Antero Resources (AR) PT Raised to $46 at Wolfe Research

Wolfe Research analyst Doug Leggate raised the price target on Antero Resources (NYSE: AR) to $46.00 (from $44.00) while maintaining a Outperform rating.

The analyst comments "Company description: AR is an exploration and production company with a market cap of about $11.5bn. Its primary assets are located in Appalachia where it is focused on the development of its liquids' acreage in the Marcellus play, mainly in West Virginia. It also retains an approximate 29% interest in Antero Midstream. YTD AR has performed in line with the XLE, with the shares recovering after lagging the benchmark on strong US natural gas pricing out of the summer injection season. Our Outperform rating reflects AR's position as the lowest sustaining capital break-even gas weighted E&P in the sector, by virtue of its liquids and integrated midstream advantages which together lowers its dry gas break even and positions it as the logical consolidator in the liquids core of the WV Marcellus. The acquisition of HG II helps to address concerns around the duration of its liquids rich inventory, although near term it lowers pro-forma liquids share of total dry gas production, and may dilute best in class price realizations given exposure to LNG (75% of gas) and premium liquids / gas markets. The sale of its Utica - which we see at a robust valuation vs PdP value also temporarily lowers liquids mix. By our analysis the acquisition ticks all the boxes of FcF accretion and duration, with a compelling geographical fit and associated industrial synergies, and line of sight to rapid deleveraging given solid hedges in place on 90% of acquired production. By our estimate the deal lifts AR's FcF yield by ~3% in 2026 and 2027."

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