Antero Resources Corporation (NYSE:AR) upgraded from Neutral to Outperform, price target raised to $49 from $47

The stock has continued outperforming the overall sector despite oil prices plunging to multi-year lows.

Antero Resources Corporation (NYSE:AR) shares rose in Friday's premarket trading after Mizuho upgraded the stock from Neutral to Outperform and hiked the price target to $49 from $47. The stock upside potential is 19.31% as of Friday, May 13.

The upgrade follows the company's solid first-quarter results and adjusted integrated oil models. Net income totaled $208 million and adjusted net income arrived at $247 million. Adjusted EBITDAX surged 110% to $549 million, and operating cash flow climbed 75% to $458 million.

"While we expect a material decline in oil prices, we are also forecasting a step-up in gas and refining fundamentals, which should benefit AR over the next year," the analyst firm explained.

Mizuho has also raised its gas forecast for the US by 15%, noting that it's modeling a persistently undersupplied market which should be helpful for Antero Resources in particular.

"We've also raised our U.S. gas forecast by ~15% for '25 on models that we believe factor in a persistently undersupplied market (which bodes well for AR in particular). We're now expecting avg. U.S. gas futures to decline to $3.0/gas this year (vs. $3.75 in '24) and anticipate a step-up in avg. refining margins to $16/barrel (vs. $14 in '24) on tight product inventory.

"Finally, AR returned value to shareholders, repurchasing 2.7M shares for $92M in 1Q. We view this as a positive development, especially considering the company's strong cash flow generation capabilities and commitment to maximizing shareholder returns."

The analyst firm is modeling a WTI oil price of $70 per barrel for 2025, down from $80 per barrel previously. It's also modeling a U.S. gas price of $3 per MMBtu for 2025, up from $2.50 previously.

The analyst firm notes that Antero Resources is pivoting to a more balanced mix of hydrocarbons, reducing its natural gas volumes and increasing oil production in response to the changing commodity price environment.

"The company is focusing on maximizing the value of its assets and adapting to the evolving energy landscape," the analyst firm stated.

Antero Resources Corporation is an independent oil and natural gas company that develops, produces, explores for, and acquires natural gas, natural gas liquids (NGLs), and oil properties in the Appalachian Basin in West Virginia, and northern Pennsylvania. The company's operations are focused on the Marcellus Shale, a large shale natural gas system, and Utica Shale, a shale oil and natural gas system. Antero Resources Corporation was founded in 1990 and is based in Denver, Colorado.