On Monday, Truist Securities updated its financial model for Gulfport Energy (OTC:GPORQ) Corporation (NYSE: GPOR), resulting in a reduction of the stock's price target to $194 from the previous $201. Despite the lower price target, the firm maintains a Buy rating on the stock.
The adjustment comes after Truist Securities revised its price deck and updated forecasts for the years 2024 through 2026. The new $194 price target is based on two equally weighted methodologies.
The first method utilizes a 5.5x EV/EBITDAX multiple, which is notably higher than the peer average of 3.9x, applied to the firm's 2025 estimated EBITDAX of $853 million. This estimate is slightly below the consensus of $907 million.
The second methodology employed by Truist Securities involves a Free Cash Flow to Enterprise Value (FCF/EV) Yield assumption of 10.0%. This dual-approach valuation reflects a comprehensive analysis of Gulfport Energy's financial prospects.
The revised target reflects the firm's updated expectations and provides investors with a current valuation benchmark for Gulfport Energy. The company's stock price will continue to be influenced by market conditions and its operational performance in alignment with these forecasts.
In other recent news, Gulfport Energy Corporation has reported strong Q1 financials, with significant achievements in operational efficiency and strategic hedging. The company generated $186 million in adjusted EBITDA and $39 million in adjusted free cash flow.
Gulfport Energy has also confirmed its commitment to returning value to shareholders, primarily through common share repurchases, while maintaining a robust hedge position to mitigate natural gas price volatility.
The company achieved an average daily production of nearly 1.054 billion cubic feet equivalent, and completed 8 gross wells, the majority of which targeted the Utica formation. Gulfport Energy has announced plans for a 4-well Marcellus development in early 2025, despite some drilling and completion activities being deferred. The company has also reaffirmed its full-year production and capital guidance, with a focus on share repurchases.
Gulfport Energy has a strong financial position, with a net leverage ratio of 0.9 times and liquidity of $757 million. The company has hedged 60% of its remaining 2024 production with downside protection and has begun hedging for 2025.
Furthermore, discussions are ongoing for midstream opportunities in the Ohio Marcellus, with future development dependent on commodity prices.
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