Gerdes downgrades Range Resources stock rating to neutral on valuation

Gerdes Energy Research has lowered its rating on Range Resources stock to neutral, citing limited upside potential. The firm maintained its $49 price target, noting Range Resources has surged about 24% since June 17 and now has under 10% equity value upside. The stock trades at $45.52, just 6% below its 52-week high of $48.31 and up 30% year-to-date.

Gerdes emphasizes the stock's appreciation has reached a point where further gains appear limited at current levels. While the near-term outlook is cautious, Fair Value analysis still suggests the stock is undervalued, with a low PEG ratio of 0.15. Range Resources holds around $250 million in in-process inventory, capable of converting approximately 400,000 feet to production by 2027, generating up to 400 million cubic feet equivalent per day.

By 2027, production is projected to reach 2.61 billion cubic feet equivalent per day, with liquids comprising 34% of output. Analysts' projections incorporate $253 million in divestiture-related midstream contract obligations through 2030. Following 2027, the company is expected to maintain a 1% production compound annual growth rate through 2031 if annual capital spending remains at $700 million.

Notably, other firms like Raymond James and Mizuho have also adjusted their outlooks for Range Resources.