Coterra Energy Surges 12.3% to 13-Month High on Merger Speculation

Coterra Energy’s stock surged to its highest level since the start of 2026 on Wednesday, rallying 12.3% intraday after four consecutive days of gains. The rally, which follows a 3.2% jump following merger speculation with Devon Energy, has pushed the stock to a 13-month high amid heightened investor optimism over strategic consolidation in the Permian Basin.

Speculation about a potential merger between Coterra and Devon has intensified, with analysts highlighting the deal’s potential to create a combined entity with 746,000 net acres in the Delaware Basin and expanded operations across the Rocky Mountains, Texas, and Pennsylvania’s Marcellus Shale. Such a merger could streamline capital expenditures, enhance operational efficiency, and position the company to compete more effectively with larger peers. The stock’s recent performance aligns with broader industry trends, where consolidation is seen as a tool to navigate low-margin environments and regulatory pressures.

Coterra’s strong financial metrics have further bolstered investor confidence. The company maintains a debt-to-equity ratio of 0.28, a 31.1% operating margin, and a 62.6% EBITDA margin, reflecting disciplined cost management. Institutional ownership at 87.92% and a recent 5.3% increase in holdings by Fifth Third Wealth Advisors underscore market confidence. While Coterra’s Altman Z-Score of 2.24 raises some caution, its undervalued valuation metrics—P/E of 11.93, P/S of 2.77—suggest upside potential. Analysts project a target price of $32.33, reflecting optimism about the company’s strategic and financial trajectory.