UBS has upgraded Equinor ASA (NYSE: EQNR) from a “Sell” to a “Neutral” rating and adjusted its price target to NOK 280.00, up from NOK 275.00. This update follows a recent 10% decline in Equinor’s share price over the past month, driven by weaker oil prices and a broader market downturn.
UBS’s revised outlook reflects a more balanced view of Equinor’s near-term risks. The firm notes that European gas prices have remained higher than expected, potentially providing some stability against market fluctuations.
Despite forecasts suggesting a possible decline in Equinor’s earnings for 2024 and 2025, UBS anticipates a rebound in oil prices. Additionally, the influence of European gas prices on Equinor’s financial performance is expected to be less significant than previously thought.
The upgrade aligns UBS’s position with the broader market consensus. The firm also highlights Equinor’s leading distribution yield of 18% for 2024, which is expected to support the stock price and attract investor interest.
UBS’s new price target of NOK 280.00 is only 2% below the current trading price of Equinor shares, indicating a slightly improved outlook for the company amid recent market challenges.
In recent developments, Equinor reported strong Q1 financial results, including an adjusted net income of $2.7 billion and an adjusted operating income before tax of $7.5 billion. These results were driven by increased production and new production licenses.
Equinor has also expanded its U.S. onshore gas position through a transaction with EQT (ST
), aimed at boosting production and profitability.
TD Cowen has reduced its price target for Equinor while maintaining a “Hold” rating. This adjustment reflects a revised earnings outlook, including a second-quarter 2024 EPS estimate of $0.85, surpassing the consensus estimate of $0.78 per share. The revision accounts for weaker Marketing, Midstream, and Processing (MMP) realizations and higher-than-expected gas prices in Norway.
In the renewables sector, Equinor is moving towards an investment decision for the Empire Wind 1 project in New York. The company has proposed a cash dividend of $0.35 per share and a two-year share buyback program.
Equinor’s strong financial position, with over $37 billion in cash and equivalents, supports a total capital distribution of $14 billion in 2024. This is part of the company’s strategy to enhance operational efficiency, advance its renewable energy projects, and maintain robust capital distribution.
InvestingPro Insights
Following UBS’s update, InvestingPro provides additional insights into Equinor ASA’s financial health and market performance. With a market capitalization of $72.65 billion, Equinor is a major player in the Oil, Gas & Consumable Fuels industry. Its P/E ratio stands at 8.02, suggesting the stock may be undervalued relative to its earnings potential.
InvestingPro highlights Equinor’s strong dividend track record, with 23 consecutive years of dividend payments and a current yield of 10.82%. This stability and high yield make the stock attractive to income-focused investors. Additionally, Equinor’s low price volatility offers stability in a sector known for fluctuating oil and gas prices.
For further analysis, InvestingPro’s platform provides detailed financial metrics and predictions. Equinor’s profitability over the past year and positive outlook for the coming year reflect its resilience and strategic operations. Investors can access more detailed insights and tips on InvestingPro’s platform.