On Monday, Truist Securities revised its price target for Murphy Oil Corp . (NYSE:MUR), dropping it to $55 from the previous target of $59, while still recommending a Buy rating for the stock. The adjustment was based on changes to the firm's financial model, which now incorporates a modified price deck and updated forecasts for the years 2024 through 2026.
The new price target of $55 is the result of two equally weighted valuation methods. The first method applies a 3.5 times multiple to the estimated EBITDAX for the year 2025, which Truist Securities anticipates to be around $2,397 million. This figure is higher than the consensus estimate of $2,240 million. The multiple of 3.5x is slightly below the peer average of 3.9x.
The second valuation method used by Truist Securities is based on a free cash flow (FCF) to enterprise value (EV) yield assumption of 14.0%. This dual-approach to valuation reflects the firm's analytical process in determining the target price for Murphy Oil Corp.
Murphy Oil's stock price target has been influenced by the updated financial model that takes into account the revised price deck and the latest forecasts. Truist Securities' analysis suggests that, despite the reduction in the price target, the company's stock still holds potential for investors, as evidenced by the maintained Buy rating.
In other recent news, Murphy Oil Corporation (NYSE:MUR) has seen a series of developments. JPMorgan (NYSE:JPM) increased the share target for Murphy Oil to $53.00, maintaining an Overweight rating, anticipating a robust operational quarter for the company. Murphy Oil's second-quarter EBITDAX is projected at $429 million, with earnings per share (EPS) and cash flow per share (CFPS) forecasts at $0.66 and $2.59, respectively. This is based on oil volumes of 93 thousand barrels per day (MBo/d) and total volumes of 180 thousand barrels of oil equivalent per day (MBoe/d).
In the company's first quarter 2024 earnings call, Murphy Oil reported a strong financial performance with total production reaching 170,000 barrels equivalent per day, surpassing its guidance, and revenue for the quarter standing at $746 million. The company also increased its quarterly dividend to shareholders.
On the operations front, Murphy Oil reported encouraging production trends from its onshore operations, with 20 wells initiated in the Eagle Ford (NYSE:F) and Tupper Montney during the quarter. The company is also preparing for its two-well exploration campaign in Vietnam, with drilling scheduled for the end of the third quarter and the fourth quarter of 2024.
However, the approaching Tropical Storm Beryl could potentially disrupt operations for several oil companies, including Murphy Oil, emphasizing the importance of weather-related considerations in the oil industry. These are recent developments that investors should take note of.
InvestingPro Insights
For investors looking at Murphy Oil Corp. (NYSE:MUR) following the revised price target by Truist Securities, recent data from InvestingPro provides additional insights. The company boasts a market capitalization of approximately $6.3 billion and maintains an attractive price-to-earnings (P/E) ratio of 11.44, which further adjusts to 10.88 on a last twelve months basis as of Q1 2024. This valuation metric suggests that the stock might be undervalued compared to the industry average.
Murphy Oil's commitment to shareholder returns is also notable, with a dividend yield of 2.88% and a record of 54 consecutive years of dividend payments, showcasing the company's stability and reliability. Additionally, the stock has experienced a strong return over the last five years, indicating resilience and potential for long-term growth. An InvestingPro Tip points out that analysts predict the company will be profitable this year, reaffirming the positive outlook expressed by Truist Securities.
Investors seeking comprehensive analysis and additional InvestingPro Tips can explore the full suite of insights on Murphy Oil, including more detailed financial metrics and expert forecasts, using the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription. There are 9 additional InvestingPro Tips available, which could further inform investment decisions and strategies regarding Murphy Oil Corp.
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