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On Thursday, JPMorgan analyst Zach Parham revised the price target for Matador Resources Company (NYSE:MTDR) downward to $61.00 from the previous $65.00, while continuing to recommend the stock with an Overweight rating. According to InvestingPro data, the stock appears undervalued at its current market capitalization of $5.32 billion, despite falling over 20% in the past six months. The adjustment comes amid the firm's analysis of the company's financial performance and capital expenditure estimates for the first quarter.
Parham's forecast for Matador's first-quarter cash flow per share (CFPS) is marginally above the street's estimate, coming in at $4.64 compared to $4.59. However, the adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) projection of $627 million is slightly lower than the street's expectation of $638 million. The company's anticipated capital expenditures for the quarter are $442 million, which is just under the street's prediction of $450 million. With a P/E ratio of 5.88x and impressive revenue growth of 23.61% over the last twelve months, Matador maintains strong fundamentals. InvestingPro subscribers have access to over 30 additional financial metrics and insights about Matador's performance.
The construction of Matador's Marlan processing plant is progressing as planned, with the facility expected to commence operations in the second quarter of 2025. Matador is also projected to generate $140 million in free cash flow (FCF) during the first quarter.
In a recent press release, Matador Resources announced its intention to discuss the initiation of a stock buyback program at the upcoming board meeting next week, signaling a shift in the company's communication strategy. The company currently offers a dividend yield of 2.94% and has raised its dividend for four consecutive years, according to InvestingPro analysis. Parham notes that following the earnings release, Matador could begin repurchasing shares, and during the earnings call, details on the potential aggressiveness of the buyback program may be revealed.
The analyst also highlighted that Matador's senior management and board members have been actively purchasing company shares, with around $1.6 million in acquisitions made during the first quarter. After revising the financial model and adjusting market type curves, JPMorgan reaffirmed its Overweight rating on Matador Resources, albeit with a reduced price target of $61, effective December 2025.
In other recent news, Matador Resources Company has completed the sale of its Eagle Ford shale assets in South Texas, generating over $30 million and significantly reducing its debt. This strategic move has left Matador with $405 million outstanding under its credit arrangement and a robust liquidity position of about $1.8 billion. KeyBanc Capital Markets reaffirmed its Overweight rating on Matador, maintaining a $72 price target, citing strong well performance from the second half of 2024. Benchmark also maintained a Buy rating with a $62 price target, highlighting first-quarter earnings estimates that surpass consensus expectations.
JPMorgan raised its price target for Matador from $75 to $76, despite the company's recent production miss due to midstream constraints, which have since been resolved. The firm anticipates Matador's oil production to reach 123.5 thousand barrels per day by FY25, with a focus on advanced completion techniques. Truist Securities reiterated a Buy rating with an $80 price target, praising Matador's fourth-quarter performance and its ability to exceed production expectations. Matador's strategic management of capital expenditures and its strong midstream operations are seen as key factors in maintaining its positive trajectory in the energy sector.
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