• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing
  3. / Energy

Stressed Out: Southwestern Energy a Top Pick Ahead of Cold Winter

Mizuho initiates coverage on Southwestern Energy ahead of a very cold winter.
By ANDERS KEITZ Oct 06, 2016 | 03:30 PM EDT
Stocks quotes in this article: SWN

This article is part of a Real Money series on 20 companies investors should consider adding to their distressed watch list.

With a natural gas rally appearing to be "inevitable," Mizuho selected Southwestern Energy (SWN) as a top pick in the exploration and production sector.

Mizuho's Timothy Rezvan initiated coverage of SWN with a Buy rating and a $20 price target. Shares were rising by more than 1% during the trading session Thursday afternoon.

Rezvan wrote in a research note Wednesday that there is "no ignoring the fact that management deftly recapitalized the balance sheet this summer." The Mizuho analyst believes that the company is at an inflection point and ready to transition back into production growth in 2017, adding that the West Virginia Utica Shale could be a potential catalyst for that year.

That being said, despite management efforts raising capital during the third quarter, the company "remains over 3x levered (pro forma)."

There are other risks Southwestern faces as well, in particular the risk of another sustained decrease in natural gas prices "could make its drilling program economically unfeasible and result in low/no production growth," Rezvan wrote.

But the Mizuho analyst is bullish on the outlook for natural gas, even through 2018. Rezvan cited the secular demand increases from U.S. industrial/utility consumers, increasing exports to Mexico, visibility on liquefied natural gas (LNG) export growth and the low gas rig count.

The Natural Gas Supply Association (NGSA) projects overall demand will rise to a record average of 92.3 billion cubic feet per day ("Bcf/D"). That's because this winter is forecast to be 12% colder than a year ago, boosting the demand from the residential and commercial sectors. Exports to Mexico and LNG exports will also increase compared to last winter, according to the NGSA.

While the world gets ready for a colder winter, it will likely heat up Southwestern Energy's pocket books -- and could help with the company's high debt load.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

Employees of TheStreet are restricted from trading individual securities.

This report has been prepared by Mizuho Securities USA Inc. ("MSUSA"), a subsidiary of Mizuho Americas LLC, solely for the purpose of supplying information to the clients of MSUSA and/or its affiliates to whom it is distributed. This report is not, and should not be construed as, a solicitation or offer to buy or sell any securities or related financial products.

 

TAGS: Investing | U.S. Equity | Energy | Analyst Actions | Oil Equipment/Services

More from Energy

Occidental Petroleum Continues to Target Higher Prices

Bruce Kamich
May 16, 2022 2:52 PM EDT

Here's our first price target and our long term objective.

Diamondback's FANGs Could Dull in the Short-Term

Bruce Kamich
May 13, 2022 9:30 AM EDT

Let's check out the charts of this oil producer.

Trading for a Bounce -- Not a Bottom

Peter Tchir
May 10, 2022 10:00 AM EDT

Here's my thinking on the Nasdaq, bonds, energy, commodities and crypto right now.

If You Insist on Trading This Brutal Market, Don't Get Lazy With Your Stops

Bob Byrne
May 10, 2022 8:30 AM EDT

That word of warning applies to ETFs and individual stocks such as Intercept Pharmaceuticals, which we outline a trading strategy for here.

American Electric Power Could Correct Lower

Bruce Kamich
May 10, 2022 8:07 AM EDT

Let's see what the charts and indicators look like.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 07:14 PM EDT PAUL PRICE

    A New, Very Scary Movie

  • 08:51 AM EDT PAUL PRICE

    Advice From the Future...

  • 12:20 PM EDT PAUL PRICE

    A Blast From the Past Regarding Bitcoin

  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2022 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login