Scotiabank Adjusts Rating for EOG Resources
On September 26, 2025, Scotiabank recalibrated its outlook on EOG Resources (NYSE:EOG), downgrading the oil and gas producer from "Sector Outperform" to "Sector Perform." Despite this adjustment, analyst Paul Cheng maintained a price target of $130.00 per share for EOG.
EOG Resources operates as a prominent oil and gas producer with significant acreage spanning major U.S. shale plays, including the Permian Basin and the Eagle Ford. As of the end of 2024, the company reported net proven reserves of 4.7 billion barrels of oil equivalent. Its net production in 2024 averaged approximately 1,062 thousand barrels of oil equivalent per day, with a composition of 69% oil and natural gas liquids and 31% natural gas.
Rationale for the Downgrade: Valuation Scrutiny
The primary driver behind Scotiabank's downgrade was valuation concerns. Analyst Paul Cheng highlighted that EOG Resources is trading at elevated levels when compared to its large-cap exploration and production counterparts. This assessment was partly informed by EOG's ranking in Scotiabank's annual net asset value study, where it appeared lower within its sector. The company's P/E ratio, at 11.40, is notably close to its three-year historical high of 11.5.
This sentiment is not isolated. In August 2025, Argus Research similarly downgraded EOG Resources to "Hold" from "Buy," also citing valuation concerns, particularly regarding its Price-to-Cash Flow and Enterprise Value-to-EBIT ratios.
Market Sentiment and Options Activity
The market's immediate reaction and options activity reflect a degree of caution. The put/call ratio for EOG Resources stands at 1.21, with some data indicating it as high as 1.29. A ratio above 1.0 is generally interpreted as a bearish signal among options traders, suggesting a greater volume of puts (bets on price decline) relative to calls (bets on price increase).
Broader Analyst Consensus and Price Targets
Despite the recent downgrades, the overall sentiment from Wall Street analysts remains moderately positive. Based on ratings from 24 analysts over the past 12 months, EOG Resources holds a consensus rating of "Moderate Buy." Specifically, 12 analysts recommend a "Hold," 11 suggest a "Buy," and 1 maintains a "Strong Buy" rating.
The average one-year price target for EOG Resources is $143.48 per share, with a range spanning from a low of $124.00 to a high of $173.00. This average target represents a forecasted upside of 22.29% from the stock's latest reported closing price of $117.33. However, it is noteworthy that analysts collectively rate EOG Resources slightly less favorably than the broader energy sector, with a consensus score of 2.54 compared to the sector average of 2.61.
EOG Resources' Financial Health
EOG Resources continues to exhibit robust financial health, underpinned by strong profitability and a solid balance sheet. The company reported earnings per share (EPS) of $2.32 for its latest quarter, surpassing analysts' expectations. Key profitability metrics include a net margin of 25.25%, an operating margin of 34.18%, and an EBITDA margin of 51.43%. Furthermore, its return on equity (ROE) stands at a healthy 20.51%, demonstrating efficient capital utilization.
The balance sheet remains strong, with a current ratio of 1.79 indicating ample liquidity and a low debt-to-equity ratio of 0.16, suggesting limited leverage. EOG Resources also offers a meaningful dividend yield of 3.34% and has a track record of increasing its dividend for eight consecutive years, supported by a sustainable payout ratio of 37.90% (estimated 33.80% for next year).
However, recent insider activity shows some caution, with two insider selling transactions recorded over the past three months.
Outlook and Key Considerations
The downgrade by Scotiabank introduces short-term downward pressure on EOG Resources' stock price as investors reassess its valuation relative to its peers. While the company's fundamental financial health remains strong, with impressive profitability and a conservative balance sheet, the elevated valuation metrics are a key point of consideration for analysts.
Moving forward, market participants will closely monitor commodity price fluctuations, the broader performance of the exploration and production sector, and any further revisions in analyst ratings. EOG Resources' operational execution in its core shale plays will also be critical in justifying its valuation and influencing future investor sentiment. The interplay between strong fundamentals and valuation concerns will likely dictate the stock's trajectory in the coming weeks and months.
source:[1] Scotiabank Downgrades EOG Resources (EOG) (https://fintel.io/news/scotiabank-downgrades- ...)[2] EOG Resources Downgraded by Scotiabank, Maintains Price Target | - GuruFocus (https://vertexaisearch.cloud.google.com/groun ...)[3] EOG Resources (EOG) Stock Forecast and Price Target 2025 - MarketBeat (https://vertexaisearch.cloud.google.com/groun ...)