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Investing.com - Mizuho (NYSE:MFG) has reiterated its Neutral rating and $23.00 price target on Vital Energy (NYSE:VTLE), representing a 26% upside from the current price of $18.29, ahead of the company’s second-quarter 2025 earnings report. According to InvestingPro data, the stock appears slightly undervalued based on its Fair Value analysis, despite falling nearly 60% over the past year.
The firm’s EBITDX and cash flow per share forecasts for Q2 2025 are approximately 2-3% above consensus estimates, despite projecting similar oil volumes. With last twelve months EBITDA of $1.24 billion, Mizuho expects Vital Energy’s second-quarter capital expenditures to approach the top end of guidance as the company accelerates some completion capital into the quarter. InvestingPro analysis reveals the company is currently operating with a significant debt burden of $2.4 billion, making capital allocation decisions particularly crucial.
Despite this acceleration, Mizuho notes there is no change to the aggregate Q2/Q3 capital expenditure or timing of wells turned in line, though the shift puts the firm’s Q2 2025 free cash flow estimate below consensus. The research firm does not anticipate significant changes to Vital Energy’s 2025 outlook.
Mizuho highlights that Vital Energy’s focus remains on strengthening its balance sheet and achieving its approximately $300 million debt-reduction target by year-end 2025. The company is expected to experience a substantial free cash flow inflection in the fourth quarter of 2025. For deeper insights into Vital Energy’s financial health and detailed analysis, investors can access the comprehensive Pro Research Report available exclusively on InvestingPro, which covers over 1,400 US stocks with expert analysis and actionable intelligence.
The firm also anticipates initial updates on Vital Energy’s latest well design concept, specifically two "J-Hook" wells in the Delaware Basin completed in Q2, as the company continues to prioritize organic inventory expansion rather than pursuing further mergers and acquisitions.
In other recent news, Vital Energy Inc. reported its first-quarter earnings for 2025, delivering an earnings per share (EPS) of $2.37, which surpassed analysts’ expectations of $2.08. Despite this positive earnings performance, the company’s revenue fell short, totaling $512.18 million compared to the forecasted $534.33 million. Additionally, Vital Energy reduced its net debt by $135 million during the quarter. S&P Global Ratings revised the company’s outlook from positive to stable, affirming its ’B’ issuer credit rating, citing slower improvement in credit measures due to lower commodity prices. The company plans to use its positive free operating cash flow to repay borrowings on its credit facility. Analysts from S&P expect Vital Energy’s funds from operations (FFO) to debt to average less than 45% in 2025 and 2026, a decrease from previous estimates. Vital Energy’s acquisition activities, including an 80% interest in Point Energy Partners, have increased its scale and production capabilities. The company anticipates maintaining flat production year-over-year while remaining free cash flow positive into 2026.
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