On Friday, Coterra Energy Inc. (NYSE:CTRA) shares gained 2.26% after receiving two upgrades from Goldman Sachs Group Inc. (NYSE:GS) and Piper Sandler Co. (NYSE:PIPR).
Goldman’s Neil Mehta cited the company’s recent merger with Cimarex Energy as a significant win against concerns about Appalachia Basin risk, adding that it provides exposure to liquids production. The analyst also says CTRA is on track to generate free cash flows, which it plans to return to shareholders.
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Goldman’s upgrade came hot on the heels of Piper Sandler’s upbeat rating on Thursday, which said Coterra is one of the best-positioned oil & gas exploration and production companies in the industry following its merger with Cimarex.
Goldman’s price target of $25 implies an upside potential of about 20% from Thursday’s closing price, while Piper Sandler’s target points to 21% upside.
Time to bet on Coterra growth?
From an investment perspective, Coterra shares trade at a lucrative forward P/E ratio of about 7.18, making it a compelling option for value investors. Moreover, analysts forecast an impressive EPS growth rate of nearly 33% next year and average annual growth of more than 71% for the next five years.
Therefore, the stock could gain the attention of long-term investors given the exciting prospects of its merger with Cimarex.
Technically, Coterra shares seem to be trading within a descending channel formation in the intraday chart. However, the stock recently bounced back to surge towards the trendline resistance, creating an opportunity for a pullback.
Nonetheless, with shares yet to reach the overbought conditions of the 14-day RSI, investors could target extended gains at about $22.67, or higher at $23.57. On the other hand, $20.34 and $19.28 are crucial support zones.
Time to target breakout profits?
In summary, although Coterra shares have advanced to retest the trendline resistance, the stock is yet to reach overbought conditions.
Therefore, given the company’s exciting growth prospects and compelling valuation, it could be time to target a channel breakout.
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