8. EQT Corporation (NYSE:EQT)
Average Price Target Upside: 9.61%
Number of Hedge Fund Holders: 48
Commenting on natural gas stocks possibly thriving under the new administration, Cramer said that EQT Corporation (NYSE:EQT) is a buy.
“First, you could own some producers. Now I happen to like a company called EQT, which is exclusively focused on natural gas operations in the Appalachian Basin across Pennsylvania, West Virginia, Ohio. After spending a couple years trading sideways, EQT has caught fire since the election, climbing 22% to its highest level since late 2022. Well, even before the election, this stock was getting some buzz. Bank of America reinstituted coverage with a buy rating in late October. Then the next day, EQT reported a terrific beat and raise quarter, which did shock me.
Earlier this year, EQT made a pipeline acquisition buying Equitrans, all stock deal valued the combined company [at] more than $35 billion, that closed in July. In the latest conference call, EQT CEO, Toby Rice, a real smart fellow… about the merger [said]… I’m gonna quote, ‘Transform EQT into America’s only large scale, vertically integrated natural gas business’, and true, before noting that the integration is well underway and saying that all sorts of efficiencies are being unlocked along the way. If the natural gas rally truly has legs, then I gotta tell you: EQT (is a buy).”
EQT (NYSE:EQT), a leading U.S. natural gas production company, merged with Equitrans Midstream Corporation in March to form a vertically integrated natural gas business valued at over $35 billion. By the third quarter, it had completed more than 60% of integration tasks and realized over 50% of the expected synergies from the acquisition within just three months. You can read about the company’s third-quarter results that we discussed in our article, Jim Cramer’s List of 7 Energy Stocks for the Trump Trade.
In late November, the company announced a deal with Blackstone Credit & Insurance (BXCI) to form a new midstream joint venture (JV) that includes EQT’s high-quality contracted infrastructure assets such as the Mountain Valley Pipeline, FERC-regulated transmission and storage assets, and the Hammerhead Pipeline. BXCI will invest $3.5 billion for a non-controlling equity stake in the JV, which values the venture at approximately $8.8 billion, or 12x EBITDA.
The transaction gives EQT (NYSE:EQT) access to significant equity capital while retaining rights to future growth projects, including the Mountain Valley Pipeline expansion. The company plans to use the proceeds to reduce its debt and redeem senior notes, expecting to exit 2024 with around $9 billion in net debt.
EQT’s CEO, Toby Z. Rice, noted that the JV allows the company to maintain the benefits of its Equitrans acquisition, while CFO Jeremy Knop highlighted that EQT has exceeded the high-end of its $3-$5 billion asset sale target, securing $5.25 billion in projected cash proceeds ahead of schedule.
