UBS Downgrades Range Resources to Neutral, PT Lowered to $40

UBS Downgrades Range Resources to Neutral, PT Lowered to $40

UBS has downgraded Range Resources Corporation (RRC) to Neutral, reducing its price target to $40. The decision comes amidst ongoing challenges in the natural gas sector, including potential oversupply conditions and uncertain market dynamics [1].

UBS cited several factors for the downgrade, including the recent sell-off in natural gas prices and the industry's apparent lack of learning from past supply-driven market disruptions. The analyst noted that while there were some positive aspects in the second quarter (Q2) results, such as operational efficiencies and tax legislation benefits, these were insufficient to offset the broader market headwinds [1].

Range Resources has been facing significant headwinds in the natural gas sector, with analysts expressing concern over the potential for oversupply to persist through 2026. The company's stock price has seen a decline of -16.74% over the past three months, despite upward revisions in revenue expectations for the fiscal year 2025 [1].

Other analysts have also expressed varying opinions on Range Resources. While some have maintained an Outperform rating and raised their price targets, others have downgraded the company to Neutral or Hold, reflecting the sector's overall uncertainty. Roth Capital, for instance, downgraded RRC to Neutral with a price target of $35, citing challenges in natural gas prices [1].

The current forward P/E ratio for Range Resources stands at 8.92, compared to its 5-year average of 9.81, indicating that the stock may be undervalued based on traditional valuation metrics [1]. However, the company's enterprise value (EV) to earnings before interest, taxes, depreciation, and amortization (EBITDA) ratio is currently at 5.78, slightly above the 5-year average of 6.08, suggesting that it might not be as undervalued as the forward P/E ratio suggests [1].

Investors should closely monitor the natural gas sector's supply-demand dynamics and the company's operational efficiencies to gauge the potential impact on Range Resources' stock price. The recent downgrade by UBS highlights the ongoing challenges in the sector and the importance of staying informed about the latest developments.

References:
[1] https://intellectia.ai/stock/RRC