Zacks Article Touts Gas Upside for EQT, But DeepValue Report Warns of Stretched Valuation

What happened

A recent Zacks article highlights rising LNG exports and higher gas price forecasts, painting a bullish picture for natural gas stocks like EQT. However, the DeepValue master report maintains a 'WAIT' stance, arguing that EQT's stock already prices in a constructive gas/LNG cycle and smooth integration of recent acquisitions. EQT's strengths include a high-quality, low-cost Appalachian gas resource and newly integrated gathering/transmission assets, which have driven a rebound in free cash flow and earnings as gas prices recovered. Yet, the equity trades at premium multiples (~19x P/E, ~14.6x EV/EBITDA) and far above a conservative DCF snapshot (~$14 vs. ~$55 share price), leaving a thin margin of safety in a cyclical, policy-exposed business. Thus, while macro tailwinds are real, investors must critically assess whether the optimism is already baked into the stock at current levels.

Implication

The Zacks article reinforces the narrative of growing LNG demand and higher gas prices, which could support EQT's revenue and cash flow if realized. However, DeepValue's analysis shows that these benefits are largely reflected in the stock's premium valuation, limiting upside potential without sustained price strength. EQT's operational efficiencies and vertical integration offer some resilience, but they do not justify aggressive buying at current prices given the high sensitivity to commodity cycles. Key watch items include gas price volatility, integration risks from the Equitrans/Olympus deals, and regulatory headwinds like methane fees and pipeline constraints. Therefore, a cautious approach is warranted, with investors advised to hold or wait for a more attractive entry point that offers better downside protection.

Thesis delta

The Zacks article does not materially shift the thesis from the DeepValue report, which already acknowledges a favorable gas macro but emphasizes valuation risks. It underscores the bullish sentiment that may be driving the stock, but the core concern remains that EQT is overvalued relative to its intrinsic value and cyclical exposures. Thus, the 'WAIT' stance is reinforced, with no fundamental change to the investment rationale.