National Fuel's FY25 Outlook Strengthens With Gas Price Tailwinds, Yet J.P. Morgan Holds Neutral Stance

J.P. Morgan analyst Zach Parham retained a Neutral rating on National Fuel Gas Company NFG with a price forecast of $81.00.

The analyst anticipates a solid operational performance for the company in the second quarter, with production expected to exceed consensus by 6%.

The analyst expects second-quarter EPS and EBITDA to align with the Street estimate, though with 6% higher volumes.

In particular, Parham sees second-quarter production of 1,203 MMcf/d (108.2 Bcfe), vs. consensus of 1,138 MMcf/d (102.5 Bcfe) and FY25 production of 420.2 Bcfe vs. Street estimate of 417.5 Bcfe.

The analyst projects flat production in the third quarter (108.3 Bcfe) and a slight decline in the fourth quarter (105.8 Bcfe), consistent with the company's production forecast.

Parham predicts the company will raise its FY25 guidance once more, driven by higher natural gas prices.

The analyst forecasts FY25 EPS of $7.43, surpassing the company’s guidance range of $6.50 – $7.00 (based on $3.50 per Mcf gas prices) and is also higher than the upper end of the previous guidance of $6.90 – $7.40 (based on $4 per Mcf gas prices).

The analyst projects a 20% compound annual growth rate (CAGR) for EPS through 2027 and anticipates substantial upside for FY26 earnings, with an estimated EPS of $9.22, which is 13% higher than the consensus estimate of $8.17.

Despite NFG shares trading near all-time highs, the analyst notes the company remains active in its buyback program and expects $34 million in share repurchases this quarter.

The buyback which is expected to continue at a consistent pace throughout the year to utilize the $200 million share repurchase authorization fully, adds the analyst.

Investors can gain exposure to the stock via First Trust North American Energy Infrastructure Fund EMLP and First Trust EIP Carbon Impact ETF ECLN.

Price Action: NFG shares are up 1.02% at $79.13 at the last check Wednesday.

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