We have recently initiated coverage on EQT Corporation (EQT) with an Underperform recommendation and a target price of $39.
 
Based in Pittsburgh, Pennsylvania, EQT is an integrated energy company with an emphasis on natural gas supply activities in the Appalachian area, including production and gathering, natural gas distribution and transmission, and energy efficiency solutions, primarily in the eastern and western coastal regions of the United States.
 
The company has been seeing consistent production growth on the back of its E&P segment. It estimates a 20% hike in gas sales during this year, supported by an attractive Appalachian resource potential and an extensive drilling program.
 
EQT intends to use approximately two-thirds ($565 million) of this year’s capital expenditure for its well development program. But its funding is heavily dependent on future cash flows, which is subject to a number of variables.
 
Since natural gas accounts for almost all of EQT’s reserves and production, the company’s results are vulnerable to fluctuations in the natural gas markets. With the outlook for natural gas remaining bleak, we see little reason for investors to own the stock as the ongoing long-term fundamental changes indicate struggle for the industry.
Read the full analyst report on “EQT”
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