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On Monday, Raymond (NSE:RYMD) James maintained a Market Perform rating on Hess Corporation (NYSE:HES) following the company’s fourth-quarter earnings release. Hess Corporation surpassed fourth-quarter expectations, with earnings per share (EPS) of $1.76 compared to the Street’s $1.53 forecast, and cash flow per share (CFPS) of $4.93 against the Street’s $4.29 prediction. This approximately 15% beat was attributed to robust operational performance, including higher-than-anticipated total production and oil and natural gas realizations. Additionally, Hess’s operating costs were 7% below Raymond James’s estimates. The company’s strong performance is reflected in its impressive P/E ratio of 16x and "GREAT" financial health score according to InvestingPro analysis, which also indicates the stock is currently trading below its Fair Value.
The strong quarterly results were driven by a total production output of 495 thousand barrels of oil equivalent per day (mboe/d), which exceeded the Street’s projection of 481 mboe/d. This operational success has contributed to Hess’s impressive 23% revenue growth over the last twelve months, with EBITDA reaching $7.3 billion. Despite this positive outcome, Raymond James has slightly lowered its first-quarter 2025 production estimate for Hess to 469 mboe/d, considering the impact of winter weather on operations in the Bakken region and scheduled maintenance at the Payara development in Guyana. These adjustments have led to a revised total production estimate of 491 mboe/d for the year 2025.
In light of Hess’s ongoing expansion in the Stabroek Block in Guyana, Raymond James has adjusted its 2025 capital expenditure (capex) forecast for the company to align with the guidance midpoint of approximately $4.5 billion, which is slightly below the Street’s expectation of $4.6 billion. InvestingPro data shows the company has maintained dividend payments for 38 consecutive years, with a 14% dividend growth in the last year. The firm is also closely monitoring the progress of Hess’s impending merger with Chevron (NYSE:CVX), with arbitration hearings set to begin in May and an expected conclusion around early September. Analyst targets suggest up to 14% potential upside from current levels. The anticipated closure of the deal is slated for September or October 2025.
Raymond James’s reiteration of the Market Perform rating for Hess stock reflects the analyst’s assessment of the company’s recent performance and future prospects, including the potential impact of the Chevron merger and ongoing developments in Guyana.
In other recent news, Hess Corporation has seen a series of significant developments. CFRA analyst Stewart Glickman has raised the price target on Hess shares to $154, maintaining a Hold rating. This new target reflects a valuation of 6.3 times the projected 2026 EBITDA and accounts for the ongoing uncertainty surrounding Chevron’s acquisition of Hess. The 2025 earnings per share (EPS) estimate for Hess was reduced to $7.36, and the initial 2026 EPS estimate was set at $11.95.
In addition to these revisions, Hess reported a successful fourth quarter with an operating EPS of $1.76, surpassing the consensus estimate. Despite a decrease in the average realized pricing per barrel of oil, Hess’s earnings improved due to a significant increase in production volumes. The company reported a fourth-quarter production volume of 495,000 barrels of oil equivalent per day (boe/d), marking a 7.4% increase from the previous quarter.
However, Hess has forecasted that its first-quarter volumes will range between 465,000 boe/d and 475,000 boe/d, partly due to planned maintenance activities. This outlook, along with the legal dispute between Chevron and Exxon Mobil (NYSE:XOM) over the Guyana assets, continues to influence the future of Hess shares. The arbitration related to this conflict is set to commence in May.
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