Friday - RBC Capital has increased its price target on Marathon Oil (NYSE:MRO) shares to $36 from the previous $33, while keeping an Outperform rating on the stock.
The adjustment follows the announcement of Marathon Oil's acquisition by ConocoPhillips (NYSE:COP), a deal that precludes further stock buybacks, thus affecting shareholder returns.
According to the analyst from RBC Capital, Marathon Oil's second quarter 2024 production is expected to surpass previous management expectations, rebounding from seasonal lows. However, due to the recent merger agreement with ConocoPhillips, Marathon Oil will not conduct a conference call or provide a detailed update on its operations.
The analyst noted that while the acquisition by ConocoPhillips is underway, Marathon Oil's shareholder returns are likely to remain below the 40% of cash flow from operations (CFO) payout that was previously targeted. This is attributed to the terms of the merger agreement, which restricts Marathon Oil from engaging in further stock repurchases.
Despite the anticipated lower payouts to shareholders in the near term, the revised price target suggests confidence in Marathon Oil's production growth potential. The Outperform rating indicates that RBC Capital views the stock as likely to perform better than the broader market or its sector peers over a given time frame.
The increase in price target to $36 reflects a positive outlook on Marathon Oil's performance, even as the company forgoes certain shareholder return activities due to the constraints of the ongoing merger with ConocoPhillips.
In other recent news, Marathon Oil Corporation (NYSE:MRO) has been involved in significant developments. The company is set to merge with ConocoPhillips, a process that has recently received a request for additional information from the Federal Trade Commission. Despite this, both companies expect the merger to close in the fourth quarter of 2024.
Concurrently, Marathon Oil has settled alleged Clean Air Act violations with the Environmental Protection Agency and the Department of Justice by agreeing to pay $64.5 million and implement specific injunctive relief measures.
This settlement is part of a larger $241 million agreement over allegations of air pollution violations. The company plans to invest approximately $177 million to bring its facilities up to compliance standards.
Mizuho Securities has increased its price target for Marathon Oil shares to $34.00, maintaining a neutral rating, while RBC Capital has maintained its outperform rating with a steady price target of $33.00. These developments are part of the company's recent activities and strategic decisions.
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