Raymond James lifts NOG stock target to $36, maintains strong buy

On Tuesday, Raymond (NSE:RYMD) James updated its financial outlook for Northern Oil and Gas (NYSE:NOG), increasing the price target to $36.00 from the previous $35.00, while reaffirming a Strong Buy rating for the company’s stock. The adjustment follows Northern Oil and Gas’s first-quarter performance, which showcased significant achievements, including surpassing earnings expectations. The company’s stock has shown strong momentum, gaining over 15% in the past week, with current valuation metrics showing an attractive P/E ratio of 4x and EV/EBITDA of 2.8x.InvestingPro analysis reveals that Northern Oil and Gas maintains a "GREAT" financial health score, with particularly strong marks in profitability and relative value metrics. Subscribers can access 7 additional key insights about NOG through InvestingPro’s comprehensive analysis tools.

Northern Oil and Gas reported substantial beats in earnings before interest, taxes, depreciation, and amortization (EBITDA) and earnings per share (EPS) during the first quarter of 2025. The company exceeded Raymond James and Street projections by approximately 11% and 18% for EBITDA and EPS, respectively. These results were attributed to strong operational outcomes from the Uinta Basin and consistent growth in the Appalachian region. The company has maintained its strong financial performance, with a healthy gross profit margin of 79% and has consistently raised its dividend for four consecutive years, currently offering a 6.4% yield.

After facing deferrals and logistical hurdles in the fourth quarter of 2024, Northern Oil and Gas managed to resolve these issues, leading to a robust rebound in the subsequent quarter. The company has also confirmed its full-year 2025 outlook, aligning with the forecasts provided by Raymond James.

For the full year of 2025, Raymond James anticipates Northern Oil and Gas’s production to average around 133.6 thousand barrels of oil equivalent per day (Mboe/d), with oil making up approximately 58.2% of this figure. This estimate is consistent with the company’s guidance and Street expectations. Northern Oil and Gas expects the number of wells turned in line (TILs) to reach their lowest in the second quarter before experiencing a substantial increase later in the year.

The second quarter is projected to see a slight quarter-over-quarter dip in daily production volumes to 128.5 Mboe/d, with oil representing about 59.5% of the total. This is based on a capital expenditure (capex) of $265 million. However, production is forecasted to climb in the third and fourth quarters of 2025. The full-year capex estimate stands at approximately $1.12 billion, aligning with the company’s guidance and slightly exceeding Street estimates by around 2%.

Raymond James highlighted the attractive valuation of Northern Oil and Gas, noting an estimated enterprise value to EBITDA (EV/EBITDA) multiple of approximately 3 times for the year 2025. The firm’s positive stance on the company remains steadfast, with the revised target price reflecting a modest improvement in the oil price outlook since the last update. According to InvestingPro’s Fair Value analysis, NOG currently appears undervalued, supporting Raymond James’ bullish outlook. For deeper insights into NOG’s valuation and growth prospects, investors can access the detailed Pro Research Report, part of InvestingPro’s coverage of over 1,400 US stocks.

In other recent news, Northern Oil & Gas Inc reported its Q1 2025 earnings, exceeding expectations with an earnings per share (EPS) of $1.33, compared to the forecasted $1.11. The company also reported revenue of $602.1 million, surpassing the anticipated $559.59 million. Northern Oil & Gas achieved a record Q1 adjusted EBITDA of $435 million and maintained its 21st consecutive quarter of positive free cash flow. Additionally, the company increased its credit facility to $1.6 billion, enhancing financial flexibility for ongoing and future projects. The borrowing base was reaffirmed at $1.8 billion with CIBC (TSX:CM) Capital Markets joining as a lender. Northern Oil & Gas continues to evaluate over 100 transactions, signaling a strategic focus on expansion opportunities. Despite robust financial performance, the company’s stock saw a decline in value, reflecting broader market volatility. The company remains committed to strategic capital allocation, balancing growth, debt reduction, and shareholder returns.

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