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Tuesday, EOG Resources (NYSE:EOG) experienced a modification in its stock outlook as UBS analysts, led by Josh Silverstein, reduced the company’s price target from $165.00 to $160.00, yet reaffirmed a Buy rating on the stock. Currently trading at $119.86, the stock has declined over 8% in the past week, with InvestingPro data indicating oversold conditions. The adjustment follows the company’s fourth-quarter 2024 financial performance, which presented a mixed picture, and first-quarter 2025 projections that did not meet expectations.
EOG Resources’ fourth-quarter 2024 results showed a shortfall in cash flow per share (CFPS) and production levels. The company, with a market capitalization of $65.7 billion and EBITDA of $12.56 billion, maintains strong profitability with a 61.6% gross margin. While production levels disappointed, this was somewhat counterbalanced by an increase in stock buybacks. The more concerning issue arose with the first-quarter 2025 production miss, which, coupled with rising operational expenses and taxes, is expected to lead to a decline in 2025’s free cash flow (FCF) and CFPS.
Despite these challenges, UBS’s commentary highlighted EOG Resources’ robust financial position and assets. The firm emphasized the company’s top-tier balance sheet and strong asset base, which is anticipated to become more capital efficient in 2025. Additionally, several exploration catalysts and a commitment to a significant buyback program were noted as reasons to maintain confidence in the company’s fundamentals.
The reduction in the price target to $160 from the previous $165 is attributed to the lowered forward estimates, as mentioned by the UBS analyst. The slight decrease in EOG Resources’ shares following this part of the update was deemed unsurprising by UBS, indicating that the market had anticipated this adjustment.
EOG Resources, with its continued focus on capital efficiency and exploration potential, along with its commitment to shareholder returns through buybacks and a 36-year track record of dividend payments, remains in a position that UBS analysts believe warrants a Buy rating despite the revised price target. InvestingPro analysis reveals 8 additional key insights about EOG’s financial health and market position, available to subscribers along with comprehensive valuation metrics and expert analysis in the Pro Research Report.
In other recent news, EOG Resources Inc. reported its fourth-quarter 2024 earnings, exceeding analysts’ expectations with an earnings per share (EPS) of $2.74, surpassing the forecasted $2.57. Despite this, the company’s revenue fell short of projections, coming in at $5.6 billion compared to the expected $5.88 billion. The company returned 98% of its free cash flow to shareholders, emphasizing its commitment to shareholder returns. EOG Resources also reported a 6% increase in proved reserves, reaching 4.7 billion barrels of oil equivalent, while reducing finding and development costs by 7% to $6.68 per barrel of oil equivalent.
In terms of capital expenditures, EOG Resources spent $6.2 billion in 2024, aligning with its strategic focus on operational efficiency. Looking ahead, the company plans to maintain its capital expenditures at $6.2 billion for 2025, with production growth targets set at 3% for oil and 6% in total production. The company is also focusing on international expansion, with new projects in Trinidad and Bahrain.
Analysts’ commentary from firms such as Goldman Sachs and JPMorgan Securities highlighted the company’s strategic investments and operational efficiencies, noting potential areas for growth and improvement. EOG Resources’ CEO, Ezra Yacob, emphasized the company’s strong position to deliver long-term shareholder value, underpinned by strategic investments and a commitment to sustainable growth.
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