Raymond James has downgraded Northern Oil and Gas (NOG) from Strong Buy to Outperform.
The price target was lowered from $37.00 to $35.00. NOG currently trades at $24.07.
The firm noted that NOG has about 70% of its 2026 oil production hedged at ~$70/barrel, creating near-term headwinds versus less-hedged peers.
The hedge position falls to ~15% in the following year. Despite challenges, NOG has raised its dividend for 5 consecutive years and offers a 7.5% dividend yield.
Raymond James expects NOG to exceed production guidance. Activity is improving, and industry confidence in higher oil prices should drive activity higher next year.
The favorable outlook for 2027 is supported by increasing industry activity and a smaller hedge profile. NOG trades at a 2027 estimated free cash flow to enterprise value of about 10%.
