Freedom cut Expand Energy’s price target to $113, maintaining a “Buy” rating

Higher capex with an unchanged average production outlook is limiting the valuation of Expand Energy (NASDAQ: EXE), according to Freedom Broker analysts Sergey Pigarev and Akmaral Burkutova. Following the quarterly report, the experts lowered their target price for the shares from $122 to $113 while maintaining a “Buy” recommendation.

Expand Energy produces natural gas, oil, and gas condensate in the U.S. Its core assets are located in the Haynesville and Appalachian basins. After acquiring Twin Eagle, the company expanded its presence in gas trading, storage, and transportation.

Revenue and profit beat expectations

In Q3 2026, Expand Energy’s total revenue rose 10.8% year over year to $3.3 billion, beating the consensus forecast by 15.5%. Revenue from the sale of produced hydrocarbons increased 1.7% to $1.9 billion. Gas trading generated about $0.9 billion—up 39.2% from a year earlier—mainly due to the inclusion of Twin Eagle in the financials.

Adjusted net income grew 44.4% year over year to roughly $338 million. Adjusted EPS reached $1.46, exceeding market expectations by 12.6%. The company disclosed the financial results in the quarterly report. 

Hedging drove the rise in realized prices

Average daily production totaled 7.54 Bcfe, up 2.8% year over year and above the upper end of the company’s guidance.

At the same time, the improvement in realized prices did not reflect higher market quotes. Including hedging, the average price increased 7.5% to $3.17 per Mcfe. Excluding such transactions, it declined from $2.74 to $2.71.

Hedging makes it possible to limit in advance the impact of price swings on revenue. In the reporting quarter, this program is what ensured the increase in the average realized price versus last year, Freedom’s analysts note.

Investment budget increased without a higher production forecast

Management raised its 2026 capex guidance to about $3 billion from the previous $2.75–2.95 billion. At the same time, the range for average daily production was narrowed to 7.45–7.55 Bcfe. Its midpoint remained at 7.5 Bcfe. 

In Freedom’s view, the need for larger investment to achieve the same production volume points to a decline in capex efficiency in 2026. This is consistent with management’s comments about rising oilfield services costs.

Twin Eagle expands marketing capabilities

Expand Energy completed the acquisition of Twin Eagle on September 16. The base purchase price was $1.25 billion, and cash outlays including adjustments totaled about $1.4 billion.

Twin Eagle adds a gas trading platform, storage capacity, and contracted transportation capacity. Management expects that developing the commercial segment will allow the company to generate an additional $750 million in free cash flow per year—50% more than the previous target. 

At the same time, financing the purchase increased leverage and constrained buyback capacity. In Q3, the company spent about $305 million on repurchasing its own shares. The base quarterly dividend was kept at $0.575 per share.

The company ended a period of interim leadership

On October 26, Daniel Brown, formerly head of Chord Energy, became president and CEO of Expand Energy. Michael Wichterich, who had led the company on an interim basis since February, returned to the role of non-executive chairman of the board.

The company announced the appointment on October 19. Freedom intends to monitor potential changes in strategy and capital allocation priorities under the new CEO.

Why Freedom revised its valuation

Previously, Freedom initiated coverage of Expand Energy with a “Buy” recommendation and a $122 target. The positive view was based on the scale of the business, asset diversification, and prospects for rising gas demand.

The updated $113 target reflects higher capex, the Twin Eagle acquisition, and new pricing assumptions. The valuation is based on a five-year discounted cash flow model. The “Buy” recommendation is maintained; however, controlling costs and realizing returns from expanding the commercial business are important for unlocking the upside.

Not an individual investment recommendation.