In a report released today, Jason Gabelman from TD Cowen maintained a Hold rating on Equinor ASA, with a price target of $23.00.
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Jason Gabelman has given his Hold rating due to a combination of factors surrounding Equinor ASA’s financial outlook and strategic decisions. The company’s earnings were in line with expectations, but free cash flow fell short by $0.6 billion compared to forecasts. Additionally, the net debt to capital ratio guidance from the second quarter of 2025 to the end of 2025 was flat, which was worse than anticipated. The effective date of the Peregrino sale in January 2024 also affects the actual sale proceeds, which are expected to be less than the headline figure of $3.5 billion.
Moreover, Equinor’s cash distribution policy for 2026 remains unclear, adding to the uncertainty. While the company has discussed a competitive distribution policy, specifics beyond the $5 billion distribution in 2025 are not provided. There is also a lack of concrete plans for expanding into gas-to-power or onshore North American gas, which could have been potential growth areas. These uncertainties, coupled with the need for further clarity on future production timelines and infrastructure solutions for new discoveries, contribute to the Hold rating, despite an increased price target of $23 based on adjusted forecasts.