On Monday, Truist Securities adjusted its outlook on Sitio Royalties Corp (NYSE: NYSE:STR), reducing the price target to $31 from the previous $33, while still recommending the stock as a Buy. The adjustment follows a revision of the firm's financial model, which now incorporates a new price deck and updated forecasts for the years 2024 through 2026.
The revised price target of $31 is based on a 6.0% target yield applied to the projected 2025 distributable cash flow (DCF) of $294 million. This DCF estimate by Truist Securities exceeds the consensus forecast of $261 million among other analysts.
The change in the price target reflects the firm's recalibrated expectations for Sitio Royalties' financial performance over the next few years. The analyst's comments indicate that the new target takes into account the latest available data and projections for the company's cash flow.
Sitio Royalties, traded on the New York Stock Exchange under the ticker STR, is being watched closely by investors following the updated guidance from Truist Securities. The firm's maintenance of a Buy rating suggests a continued positive outlook on the stock's potential despite the slight reduction in the price target.
Investors and stakeholders in Sitio Royalties are now equipped with the latest projections from Truist Securities as they consider the stock's future in light of the updated financial model and price target.
In other recent news, Sitio Royalties Corp reported strong Q1 2024 results, marking a record high first quarter pro forma production and successful closure of its DJ Basin acquisition. The company's financials show a pro forma discretionary cash flow of $118 million and pro forma adjusted EBITDA of $144 million, influenced by the recent acquisition. The board approved a return of capital amounting to 65% of pro forma first quarter DCF, translating to $0.49 per share.
Sitio Royalties began share repurchases in March and reported a 3.7% quarterly pro forma production growth rate. The company's first quarter pro forma production reached an all-time high of 37,970 BOEs per day, with oil comprising 51%. The DJ Basin acquisition, which was finalized on April 4, contributed over 2,600 BOEs per day with $8.5 million in asset-level cash flow in Q1.
Looking forward, Sitio Royalties anticipates the positive impact from new wells to reflect in Q2 production.
The company maintains an optimistic outlook for the remainder of 2024 and plans to create long-term shareholder value through accretive acquisitions and continuous innovation. These are the recent developments for Sitio Royalties Corp.
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