📖 Your Q2 Earnings Guide: Discover the Stocks ProPicks AI Highlights to Jump Post-EarningsRead more

Citi downgrades Marathon Oil stock amid ConocoPhillips acquisition terms

EditorEmilio Ghigini
Published 03/06/2024, 10:38

On Monday, Citi revised its stance on Marathon Oil Corporation (NYSE:MRO) stock, moving its recommendation from a Buy to a Neutral position. In conjunction with this adjustment, the firm also reduced the price target for Marathon Oil from $32.00 to $29.00.

The downgrade follows the recent announcement that Marathon Oil will be acquired by ConocoPhillips (NYSE:NYSE:COP), a deal that Citi believes will close at the agreed upon conversion ratio due to the premium offered and the support from management for the ConocoPhillips bid.

The new price target reflects a conversion ratio of 0.255 applied to ConocoPhillips' most recent closing price, and it is based on approximately 5.5 times the estimated Direct Acquisition Cash Flow (DACF) for the fiscal year 2024.

Citi's revised target price represents a modest adjustment to account for the acquisition terms, which the firm sees as favorable given the premium paid.

The support for the offer by Marathon's management also strengthens the likelihood that the transaction will proceed without significant hurdles.

The analyst from Citi notes that the potential for another entity to present a competing bid is low. According to the firm, any competing offer would likely focus on capturing cost synergies rather than enhancing asset quality or extending inventory, which may not present a more compelling proposition than the current agreement with ConocoPhillips.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.