Hotter rocks, cooler valuation: Upgrade to Buy

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Hotter rocks, cooler valuation: Upgrade to Buy

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Fervo Energy

Hotter rocks, cooler valuation: Upgrade to

Buy

Rating Change: BUY | PO: 36.00 USD | Price: 23.11 USD

Learning curve is delivering; Upgrade to Buy on valuation 17 July 2026

We upgrade Fervo Energy (FRVO) to Buy from Neutral with a revised $36 PO. Our Equity

fundamental outlook and probability-weighted SOTP methodology are largely unchanged,

but the shares now offer compelling upside to our PO. The recent Sawtooth 7 drilling

Key Changesresult strengthens our conviction in Fervo’s learning-curve thesis: the company completed

a longer, deeper, hotter and larger-diameter Phase II well in 21 days, matching its prior (US$) Previous Current

Cape Phase I record. With 658 MW of binding PPAs, a $7.2B backlog, a 3 GW Google Inv. Opinion C-2-9 C-1-9

framework and Cape Station under construction, we believe the current valuation provides Inv. Rating NEUTRAL BUY

a particularly attractive buying opportunity. Price Obj. 40.00 36.00

Hotter, longer well—without longer drilling times Ross Fowler, CFA

Research Analyst

Sawtooth 7 reached 19,448 feet measured depth with a 7,500-foot lateral in a 460°F BofAS

resource, matching Cape Phase I’s 21-day drilling record despite greater complexity. As +1 646 855 1506 ross.fowler@bofa.com

the ninth Phase II well using Fervo’s 3.0 design, the result supports repeatability and Nicolas Woods

reduces risk around the company’s ability to scale Cape II. Longer laterals, larger casing Research Analyst

and higher temperatures are designed to increase MW per well and improve project BofAS +1 646 556 4179

economics. In our view, this strengthens Fervo’s commercial proposition by providing nicolas.woods_barron@bofa.com