Stifel initiated coverage of Southwestern Energy Company (NYSE:SWN) with a Buy rating and $7.50 per share price target in a note to clients Friday.
The research firm told investors in a note that Southwestern Energy offers investors a compelling rate of change story.
The analyst believes the story is "underpinned by robust natural gas demand growth from the LNG sector and operational efficiency gains in the Haynesville."
"The company's portfolio in two of the premier natural gas basins in the Lower 48 provides a sufficient runway of low-cost inventory with both geographic and commodity diversification," the firm said.
"Based on our estimates, the company trades at a 1.0x discount to peers, which reflects higher financial leverage and limited near-term FCF. However, contango in the natural gas forward strip sets up an inflection year for the stock in 2024 as the company de-levers and achieves line of sight to resuming shareholder returns."