UBS has sustained its optimistic stance on Coterra Energy (NYSE:CTRA), maintaining a Buy recommendation alongside a price target set at $33. This valuation aligns closely with InvestingPro’s Fair Value estimate, which currently regards the stock, priced at $26.92 and trading at a price-to-earnings ratio of 12.4, as undervalued.
Josh Silverstein, an analyst at UBS, anticipates that Coterra will conclude the fourth quarter of 2025 with markedly stronger operational results following a difficult initial half-year. UBS's forecasts suggest that the company’s oil production and total volume metrics are poised to surpass the midpoint of its internal guidance parameters. Complementing this forecast, Coterra has achieved notable revenue expansion, growing nearly 26% over the past twelve months, with its subsequent earnings announcement scheduled for February 19.
The UBS research note also highlights potential strategic moves regarding Coterra’s share repurchase initiatives, estimating an increase to $100 million during Q4 2025, with projections for further escalation in 2026. This anticipated acceleration is expected as the company’s efforts to diminish its debt burden lessen.
Addressing investor apprehensions, UBS touches upon ongoing activist investor pressures and speculations about merger and acquisition opportunities that have recently dominated discussions concerning Coterra. The firm expresses confidence that the company is likely to address and mitigate some of these issues.
Beyond these headline matters, UBS underscores the growing appeal of Coterra’s continued operations. This perspective supports the reiteration of the Buy rating and the associated price target. Data from InvestingPro reveals that Coterra provides investors with a 3.3% dividend yield and has a commendable track record of 36 consecutive years of dividend payments. Furthermore, its financial health is rated as “GOOD,” bolstering investment confidence. For those seeking in-depth analysis, Coterra’s detailed Pro Research Report is available through InvestingPro’s coverage of over 1,400 U.S. equities.
In a recent financial disclosure, Coterra Energy reported mixed results for the third quarter of 2025. The company posted earnings per share (EPS) of $0.41, falling short of the forecasted $0.46. Conversely, revenue surpassed expectations by reaching $1.82 billion against a projected $1.79 billion.
In strategic corporate governance developments, investment firm Kimmeridge announced plans to nominate Scott Sheffield, former CEO of Pioneer Natural Resources, to Coterra’s board. This move signals potential shifts in company leadership direction.
Simultaneously, William Blair initiated coverage on Coterra Energy with an Outperform rating, emphasizing the company's operational efficiency and distinct advantages derived from its Permian and Marcellus asset portfolios. UBS has recently updated its outlook as well, elevating its price target from $29.00 to $32.00 while reaffirming the Buy rating, crediting enhanced capital efficiency for this revision.
Collectively, these events illustrate an active phase of scrutiny and strategic evaluation for Coterra Energy, with multiple entities recognizing both its challenges and potential for future growth.
UBS reaffirmed its Buy rating on Coterra Energy, assigning a price target of $33. The firm projects operational enhancements by late 2025, buoyed by robust revenue growth and potential expansions in share repurchases. Investor focus remains on activist influences and possible M&A actions, while dividend stability and financial health contribute positively to the outlook.
Key Points
- UBS maintains a Buy rating on Coterra Energy with a $33 price target, indicating perceived undervaluation relative to current stock price.
- The company is expected to improve operational performance by the end of 2025, supported by strong recent revenue growth and potential increases in share repurchase programs.
- Investor concerns focus on activist shareholder influence and merger and acquisition prospects, while dividend reliability and solid financial health support continued attractiveness to investors.
Risks
- Potential volatility remains due to activist investor pressures and uncertainties surrounding merger and acquisition activities, which could impact strategic direction and stock performance.
- The recent quarterly earnings showed a lower-than-expected earnings per share figure, highlighting operational challenges that could affect future profitability.
- Expansion of share buybacks depends on reduced debt obligations, which may be influenced by broader macroeconomic or company-specific financial conditions.