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On Monday, Mizuho (NYSE:MFG) Securities adjusted its outlook on Magnolia Oil & Gas Corp (NYSE:MGY) by reducing the price target from $28.00 to $26.00, while keeping a Neutral rating on the stock. The revision comes as the company focuses on its 2025 financial strategy, emphasizing a commitment to keeping capital expenditures within 55% of its annual EBITDA.
Magnolia Oil & Gas has not indicated any immediate plans to decrease its operational activities or capital expenditures despite facing lower oil prices. However, the firm has reiterated its dedication to its fiscal discipline, which may necessitate a reduction in activities if oil prices remain below $58 per barrel throughout the year.
Comparatively, Magnolia’s shares have performed better than those of its small to mid-cap exploration and production peers year-to-date. This is attributed to the company’s low balance sheet leverage and reduced exposure to crude oil volatility. Despite this relative strength, the stock is trading at a higher premium to its peers based on enterprise value to EBITDA and free cash flow to enterprise value metrics.
Mizuho’s analysis indicates that if Magnolia Oil & Gas is to adhere to its capex principle, it may need to adjust its operations if the current oil price trends persist. The updated price target of $26 reflects a more cautious valuation in light of these considerations.
In other recent news, Magnolia Oil & Gas Corporation has reported several notable developments. The company announced a 15 percent increase in its quarterly dividend, raising it to $0.15 per share for Class A shareholders and $0.15 per unit for Class B unit holders, effective March 2025. This marks the fourth consecutive year of dividend increases, reflecting Magnolia’s operational achievements and commitment to shareholder returns. Meanwhile, analysts have been updating their ratings and projections for the company. Goldman Sachs downgraded Magnolia’s stock from Buy to Neutral, adjusting the price target to $26.00, citing limited catalysts for further stock performance enhancements.
Conversely, JPMorgan raised its price target from $26.00 to $28.00, maintaining a Neutral rating, following the company’s better-than-expected cash flow and steady production outlook. Benchmark analysts also maintained a Hold rating on Magnolia shares, with earnings estimates closely aligning with market consensus, predicting an EPS of $0.55 and EBITDA of $243 million for the first quarter. Additionally, the energy sector has seen increased short-selling activity, with Magnolia Oil & Gas being identified as one of the more crowded shorts, indicating significant short interest. These recent developments provide investors with a detailed view of Magnolia’s current financial and operational landscape.
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