Citi raises Vista Oil & Gas stock rating to buy, sets $66 target

On Wednesday, Citi analysts adjusted their stance on Vista Oil & Gas, S.A.B. de C.V. (NYSE:VIST), elevating the stock from a Neutral to a Buy rating and establishing a price target of $66.00. The decision to upgrade the company’s rating came after a substantial drop in its stock price, which recently saw a decline of approximately 15%. This decrease has brought the stock’s expected total return (ETR) into a range that Citi analysts consider attractive for a Buy High Reward (HR) rating, with an anticipated upside of over 30%.

The analysts at Citi justify the new price target by pointing to Vista’s compelling valuation, with projected EV/EBITDA multiples of 4.1x for 2025 and 3.5x for 2026. These valuations are supported by the company’s robust production growth outlook, which forecasts year-over-year increases of 42% in 2025 and 19% in 2026. The company’s impressive gross profit margin of 76.75% and strong revenue growth forecast of 42% for FY2024 further support this positive outlook. For deeper insights into Vista’s valuation metrics and growth potential, check out the comprehensive Pro Research Report available on InvestingPro.

Furthermore, Citi highlights the potential for Vista to benefit from the capital recycling process in the Vaca Muerta shale formation, one of the largest shale reserves in the world. This process could present new growth avenues for Vista, adding an element of optionality to the company’s investment profile. With a beta of -0.18, Vista’s stock movements often run counter to the broader market, potentially offering valuable portfolio diversification benefits.

The analysts also noted the company’s readiness to capitalize on potential mergers and acquisitions opportunities, which could further bolster Vista’s growth trajectory and market position.

In summarizing their positive outlook, Citi analysts have identified Vista Oil & Gas as their top pick within the oil and gas sector in Argentina. The upgrade reflects their confidence in the company’s future performance and its ability to leverage opportunities in the dynamic energy market of Argentina.

In other recent news, Vista Energy has been making significant strides in its operations and financial activities. The company recently announced the appointment of a new Chief Operations Officer (COO) and Chief Technology Officer (CTO), reinforcing its commitment to strengthen its management capabilities. In another development, Vista Energy has scheduled its 2024 annual results release for February 26, 2025, providing investors with an opportunity to review the company’s financial performance.

On the financial front, Vista Energy’s subsidiary, Vista Energy Argentina S.A.U., successfully priced a $600 million notes offering. This move is part of a global program initiated by Vista Argentina and is expected to close on December 10, 2024. The notes will bear an interest rate of 7.625% with a weighted average life of 10 years.

The company has also confirmed its participation in the Vaca Muerta Sur Project, a collaboration with YPF S.A., Pampa Energía S.A., and Pan American Sur S.A. The project involves the construction of a crude oil export pipeline and is slated to begin commercial operations in the second half of 2027.

In the realm of stock analysis, UBS analysts have downgraded Vista Oil & Gas stock from Buy to Neutral, reflecting a more cautious outlook for the company’s stock in the near term. However, they acknowledged the company’s strong management and operational performance. These are recent developments in the company’s operations and financial activities.

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