BofA upgrades Equinor stock rating on higher gas price outlook

On Friday, BofA Securities upgraded Equinor ASA's stock rating from Neutral to Buy and increased its price target to NOK465.00 from NOK400.00. This upgrade comes after the commodities research team raised their European TTF gas price forecast to an average of EUR95/MWh for the upcoming winter, a significant 20% increase compared to current strip pricing.

The revised forecast assumes that transits through the Strait of Hormuz will resume during the same period. Additionally, BofA raised their free cash flow estimate for Equinor by 23% for 2026-27. The firm's 2027 free cash flow estimate now stands more than 140% ahead of consensus forecasts, indicating that their oil and gas price assumptions align closely with strip pricing.

The company maintained its $4 billion buyback estimate for Equinor. According to BofA's projections, the company will conclude 2027 with over $10 billion in net cash. The firm kept its mid-cycle valuation assumptions unchanged while raising the price target from NOK400 to NOK465, which translates to $43 to $49. Equinor's current stock valuation appears attractive, with a P/E ratio of 12.01 and a PEG ratio of 0.58, suggesting a favorable valuation relative to its growth prospects.

InvestingPro analysis concludes that Equinor remains undervalued, placing the stock among those on their Most Undervalued list.