A positive productivity outlook could send shares of National Fuel Gas Company higher in the months head, according to Bank of America. The bank on Tuesday double upgraded shares of the natural gas distribution company to buy from underperform. It also increased its price target to $107 from $85, implying 27.3% upside from Monday’s close. Shares were more than 2% higher in premarket trading following the call. Year to date, the stock has soared more than 38%, outperforming the S & P 500’s gain of more than 6% in the same period. “Since acquiring the Eastern Development Area from Shell in 2020, productivity has gotten increasingly better,” analyst Kalei Akamine wrote, adding that recent data shows that production is tracking 16% ahead of management expectations. “We believe this enables a more capital efficient program through the end of the decade.” NFG YTD mountain NFG, year-to-date As a result, Akamine anticipates that EDA production will grow annually at a rate of 5%, above a consensus 3% compound annual growth rate. Meanwhile, drilling and completion capital expenditures will decline 10%, he added. Beyond that, the analyst said that the company’s volume growth is “stellar,” noting that its inventory duration is close to twice that of its peers. That should help best position the name to benefit from any potential long-term supply agreements and even “any new egress into NY from potential projects like Millenium PRO or Constitution,” he said. Akamine’s rating on National Fuel Gas Company is just one of two strong buy or buy ratings on Wall Street, per LSEG data. Three other analysts out of the six total covering the stock have a neutral view with a hold rating.
