On Friday, Stephens, a financial services firm, raised its price target on shares of Matador Resources Company (NYSE:MTDR) shares to $80.00, up from the previous target of $78.00. The firm has maintained an Overweight rating on the stock.
The adjustment follows the recent sale of the Pronto Midstream assets to San Mateo. Currently trading at $58.10, the stock shows significant upside potential, with analyst targets ranging from $62 to $87. InvestingPro analysis indicates the company is currently undervalued, with strong returns over multiple timeframes.
The transaction, which involved the sale of Pronto Midstream assets, is seen as a strategic move for Matador Resources. It generated nearly $300 million in cash for the company and allowed Matador to retain control over the assets. This development has led Stephens to increase their net asset value (NAV) per share estimate for Matador, which in turn has prompted the new price target.
With a market capitalization of $7.25 billion and impressive revenue growth of 23.82% over the last twelve months, Matador demonstrates strong financial performance. Get deeper insights into Matador's financials and access exclusive ProTips with an InvestingPro subscription.
According to the analyst at Stephens, the sale is beneficial for Matador Resources on multiple fronts. It not only bolsters the company's cash position but also ensures that Matador continues to oversee the assets that were part of the transaction with San Mateo. The company maintains a healthy financial profile with an attractive P/E ratio of 7.73 and has shown strong dividend growth of 66.67% in the last year.
The Overweight rating suggests that Stephens views Matador Resources as a favorable investment compared to other companies in the sector. The firm's analysts believe that Matador's stock is likely to perform better than the average returns of the industry over the next 12 to 18 months.
The price target increase to $80 reflects Stephens' confidence in Matador Resources' future financial performance and its ability to create shareholder value. The company's actions, particularly the sale of the Pronto Midstream assets, appear to align with Stephens' positive outlook on the stock.
In other recent news, Matador Resources has been making significant strides. The company reported strong Q3 2024 performance, largely attributed to the timely integration of the Ameredev acquisition. This integration led to enhanced production levels and operational efficiencies, with the company aiming to maintain production levels above 200,000 barrels of oil equivalent per day in 2025.
TD Cowen recently reaffirmed a Buy rating on Matador Resources shares, citing positive takeaways from a recent energy conference. The firm's analyst noted that the company's implementation of simultaneous and trimodal fracturing operations could offer additional cost savings and operational synergies.
Moreover, Matador received approximately $113 million from the sale of its 19% ownership stake in Piñon Midstream, LLC. The company plans to use these proceeds towards reducing its current outstanding borrowings under a $2.25 billion credit facility.
Despite a potential slight decrease in production for Q4 due to ongoing fracturing operations, the company's leadership remains confident in its trajectory. Matador Resources is also focusing on expanding undeveloped acreage inventory, expected to contribute to long-term growth. These recent developments highlight the company's ongoing efforts to optimize its asset portfolio and strengthen its balance sheet.
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