Equinor ASA: Hold Rating Amid Empire Wind Uncertainty and Financial Challenges

Equinor ASA (EQNR – Research Report), the Energy sector company, was revisited by a Wall Street analyst today. Analyst Jason Gabelman from TD Cowen maintained a Hold rating on the stock and has a $19.00 price target.

Jason Gabelman has given his Hold rating due to a combination of factors affecting Equinor ASA’s current and future financial outlook. One of the primary concerns is the uncertainty surrounding the Empire Wind project, which has faced a pause and potential legal challenges. This situation introduces the risk of increased leverage in an already challenging macroeconomic environment, although a worst-case scenario is considered unlikely in the near term due to Equinor’s willingness to pursue legal action.
Additionally, the company’s near-term earnings are expected to be lower due to weakening commodity prices and reduced buybacks, contributing to a more rapid increase in leverage. Gabelman has adjusted the price target to $19, reflecting these challenges and based on a valuation approach that considers the net present value of free cash flow through 2028. Despite these concerns, distributions appear secure for the current year, but the free cash flow yield is anticipated to remain relatively expensive beyond 2025.