JPMorgan raises Gulfport Energy stock price target to $208

Gulfport Energy (OTC:GPORQ) has communicated its intention to return nearly all of its free cash flow to shareholders, excluding land acquisitions, which is expected to support substantial buybacks in the future. Following the update to their model based on recent strip pricing, JPMorgan has maintained its Overweight rating and increased the target price for Gulfport Energy to $208. Based on InvestingPro's Fair Value analysis, the stock appears to be trading slightly above its Fair Value, with a P/E ratio of 16.4 and an EV/EBITDA multiple of 5.66. InvestingPro subscribers have access to 14 additional ProTips and comprehensive valuation metrics to make more informed investment decisions. Based on InvestingPro's Fair Value analysis, the stock appears to be trading slightly above its Fair Value, with a P/E ratio of 16.4 and an EV/EBITDA multiple of 5.66. InvestingPro subscribers have access to 14 additional ProTips and comprehensive valuation metrics to make more informed investment decisions. Parham anticipates a standard operational report from Gulfport Energy, noting that cash flow per share (CFPS) and earnings before interest, taxes, depreciation, and amortization (EBITDA) estimates are slightly below the sell-side consensus after adjustments.

Gulfport Energy is expected to maintain its 2025 strategy, aiming to keep production levels stable with year-over-year flat drilling and completion capital expenditures. The company is shifting focus towards a 2025 program that is more weighted towards condensate and wet gas, which is expected to yield oil and liquids growth while keeping total volume steady and slightly reducing gas volumes. Gulfport is currently operating three rigs, having recently added a rig in the South Central Oklahoma Oil Province (SCOOP) and a second rig in the Utica formation.

The company's first-quarter 2025 production is projected to fall by 4% sequentially due to limited turn-in-lines (TILs) in the fourth quarter of 2024 and the first quarter of 2025. However, production is forecasted to recover in the second and third quarters. Gulfport reported a substantial oil output increase in the third quarter of 2024, driven by the Lake VII pad in Harrison County, and updates on these wells are anticipated with the fourth-quarter report.

Gulfport Energy has communicated its intention to return nearly all of its free cash flow to shareholders, excluding land acquisitions, which is expected to support substantial buybacks in the future. Following the update to their model based on recent strip pricing, JPMorgan has maintained its Overweight rating and increased the target price for Gulfport Energy to $208. Based on InvestingPro's Fair Value analysis, the stock appears to be trading slightly above its Fair Value, with a P/E ratio of 16.4 and an EV/EBITDA multiple of 5.66. InvestingPro subscribers have access to 14 additional ProTips and comprehensive valuation metrics to make more informed investment decisions.

For the fourth quarter, JPMorgan's estimates include CFPS of $10.23 and EBITDA of $193 million, which are just below the sell-side consensus. The forecasted production for the quarter is 1,060 MMcfe/d with oil production expected to increase slightly quarter-over-quarter. The estimated capital expenditure for the quarter is $52 million, leading to a free cash flow estimate of $122 million. The company has also been active in share buybacks, purchasing 229,000 shares directly from a selling shareholder for a total value of approximately $39.3 million, averaging around $171 per share.

Gulfport Energy has communicated its intention to return nearly all of its free cash flow to shareholders, excluding land acquisitions, which is expected to support substantial buybacks in the future. Following the update to their model based on recent strip pricing, JPMorgan has maintained its Overweight rating and increased the target price for Gulfport Energy to $208.

In other recent news, Gulfport Energy has been making significant strides in its operational and financial performance. The company's third-quarter report showcased a noteworthy oil production beat, largely due to a strong performance in the Utica condensate window. This was accompanied by a positive cash flow beat and a 4% reduction in the forecasted capital expenditures for fiscal year 2024. Gulfport Energy also increased its share buyback authorization to $1 billion, reiterating its commitment to return a substantial portion of its free cash flow to shareholders.

BofA Securities analyst Doug Leggate upgraded Gulfport Energy shares from Neutral to Buy and increased the price target to $227 from the previous $164. This upgrade comes after positive well results in the volatile oil window of the Utica region and the company's continued expansion of its liquid-rich inventory. Meanwhile, KeyBanc Capital Markets raised its price target on Gulfport Energy to $205, maintaining an Overweight rating, while JPMorgan trimmed its price target to $173, also maintaining an Overweight rating.

In addition, Gulfport Energy recently entered into an agreement to repurchase 79,410 shares at a 2.25% discount, reflecting management's confidence in Gulfport's value proposition. This move is part of the company's ongoing $1 billion common share repurchase program. These recent developments highlight Gulfport Energy's strong financial health and commitment to strategic growth, particularly in high-margin liquids production.

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