On Monday, JPMorgan (NYSE:JPM) updated its outlook on Gulfport Energy (OTC:GPORQ) (NYSE:GPOR) shares, increasing the price target to $167 from $156 while maintaining an Overweight rating.
The firm anticipates a consistent operational performance from Gulfport Energy, noting the company's management has expressed confidence in driving continued operational improvements to enhance capital efficiency.
Gulfport Energy has not reduced any gas volumes, and there is a possibility that the timing of turning in line (TIL) could be adjusted to later in the year, considering the current program is weighted towards the first half and the contango in the natural gas market. Analysts are keen to hear management's perspective during the earnings call.
The firm's updated cash flow per share (CFPS) and EBITDA estimates are 10% and 8% below the sell-side consensus, respectively. This is attributed to some higher outlier estimates that seem outdated. The forecast for the first quarter CFPS is $8.80, compared to the consensus of $9.79, with a high estimate of $12.13. The EBITDA estimate of $179 million is set against a consensus of $194 million, with a high estimate of $240 million.
Production for the first quarter is projected at 1,052 million cubic feet equivalent per day (MMcfe/d), closely aligning with the consensus of 1,047 MMcfe/d. Capital expenditures are estimated at $135 million, which is in line with the consensus.
The pre-hedged natural gas price realization is expected to be $2.10 per thousand cubic feet (Mcf), with a differential of $0.14 per Mcf against the first quarter NYMEX price of $2.24 per Mcf. Free cash flow (FCF) for the first quarter is forecasted at $24 million, and it is estimated that Gulfport repurchased approximately $30 million in shares during the quarter.
The company has communicated its intention to return almost all FCF to shareholders, excluding acquisitions. Updates from management are anticipated regarding the pace of buybacks, considering the expected variability in FCF generation for 2024, as well as the strategy for acquisitions.
For the full year 2024, the firm estimates production volumes of 1,064 MMcfe/d with capital expenditures of $401 million. This compares to a consensus estimate of 1,063 MMcfe/d for volumes and $409 million for capital expenditures. With recent strip pricing at $2.33 per Mcf for gas, the model indicates a FCF of $203 million for 2024, yielding a 6.2% FCF yield.
Following these updates, the Overweight rating is reaffirmed, and the December 2024 price target is raised to reflect the improved outlook.
InvestingPro Insights
As Gulfport Energy (NYSE:GPOR) garners attention with JPMorgan's updated outlook and price target, insights from InvestingPro provide additional context for investors. The company is currently trading at a low earnings multiple with a P/E Ratio (Adjusted) of just 2.27 as of the last twelve months ending Q4 2023, indicating that it may be undervalued relative to earnings. Additionally, Gulfport Energy has demonstrated a solid financial performance, with a Gross Profit Margin of 61.81% and an Operating Income Margin of 95.5% over the same period. These metrics underscore the company's ability to maintain profitability and operational efficiency.
InvestingPro Tips highlight that Gulfport Energy has experienced a high return over the last year, with a 1 Year Price Total Return of 97.34%. This suggests that investors have been rewarded, although the stock is currently trading near its 52-week high, at 97.5% of this peak. Analysts on InvestingPro also predict the company will be profitable this year, aligning with the positive outlook reflected in JPMorgan's report.
For investors seeking comprehensive analysis and additional insights, there are over 10 InvestingPro Tips available, which can be explored for a deeper understanding of Gulfport Energy's potential. To enhance your investment research, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro.
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