Granite Ridge Resources: Hold Rating with an $8 Target Amidst Market Uncertainties and A&D Reliance

Stephen Richardson, an analyst from Evercore ISI, has initiated a new Hold rating on Granite Ridge Resources (GRNT).

Stephen Richardson has given his Hold rating due to a combination of factors affecting Granite Ridge Resources. The company, a relatively new player in the oil and gas sector formed through a de-SPAC transaction, is navigating a competitive market where achieving scale and relevance is critical for success. Richardson’s assessment acknowledges the company’s unique strategy of taking a more active role in partnerships, which differentiates it from its non-operated peers. However, there are uncertainties regarding the level of risk this entails and the outcomes, which are not expected to be clearly demonstrated until the end of 2024.

The hold rating also factors in Granite Ridge’s reliance on acquisitions and divestitures (A&D) to maintain its inventory levels, which is particularly acute for this company. Financially, while the company has a conservative balance sheet and a modest target leverage, it still needs to access funding markets to support its growth and dividend outlook. The company’s dividend yield, while higher than that of E&P peers, but lower than non-operated/minerals peers, raises questions about its sustainability and duration. Therefore, the market’s need for more tangible evidence of success and the ability to scale effectively contributes to Richardson’s decision to assign an In Line rating with an $8 target price.

According to TipRanks, Richardson is ranked #995 out of 8739 analysts.

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Granite Ridge Resources (GRNT) Company Description:

Executive Network Partnering Corp is a blank check company.