BofA upgraded Coterra Energy to Buy from Neutral with a $31 price target. The firm has taken a defensive stance towards oil in 2024 and sees some risk that it may be more challenging for Saudi Arabia to stabilize the commodity price due to the combination of uncertain demand and non-OPEC growth, the analyst tells investors. The firm’s 2024 base case is for $80 Brent, but recognizing perpetual backwardation as “a new normal” its two-year forward long-term price deck drops to $75 Brent and $70 WTI from 2026, the analyst tells investors. However, Coterra’s risk/reward has been reset and absolute value now discounts oil prices around $52 versus a long-term strip around $70 WTI, the analyst argues.
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