Natural gas names including EQT cut at Piper Sandler on lower natgas price outlook

EQT Corp. (NYSE:EQT) and Range Resources (RRC) are downgraded to Neutral from Overweight while CNX Resources (CNX) and Comstock Resources (CRK) are cut to Underweight from Neutral on Thursday at Piper Sandler, which lowers its natural gas price forecast to reflect its view that the gas market remains oversupplied, as operating efficiencies and improving cycle times will continue to drive a lower marginal cost of supply.

While Q2 earnings proved a difficult quarter for stock selection, Piper Sandler’s Mark Lear says the broad message from E&Ps was continued operating efficiency improvements that are driving down costs but were more than offset by macro volatility and a stubbornly oversupplied gas market with more gas heading to the Gulf Coast imminently.

In a broadly strong quarter despite weak gas pricing, Lear says Q2 earnings prints from Coterra Energy (NYSE:CTRA), Devon Energy (DVN), Diamondback Energy (FANG) and Permian Resources (PR) were among the strongest in the E&P group, with Overweight-rated Coterra the favorite way to play natgas in his coverage.