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On Tuesday, Stephens analyst Mike Scialla revised the price target for Matador Resources Company (NYSE:MTDR) shares, bringing it down to $86 from the previous $90, while maintaining an Overweight rating on the stock. The revision comes as Matador’s shares trade at $39.23, with analyst targets ranging from $56 to $90. According to InvestingPro analysis, the stock appears undervalued despite falling nearly 30% year-to-date. Scialla’s report suggests a cautious stance due to current challenges in the global oil market, which may influence the company’s strategic decisions moving forward.
Scialla noted that Stephens’ estimates for Matador’s first-quarter cash flow per share (CFPS), production, and capital expenditures are slightly divergent from the consensus, with CFPS and capital expenditures being 2% and 4% lower respectively, although production estimates align with the company’s guidance midpoint. The company maintains strong fundamentals with an 80.5% gross profit margin and trades at an attractive P/E ratio of 5.45x. Despite this, Matador has a history of outperforming expectations.
The analyst pointed out that the upcoming conference call is expected to focus on potential adjustments to Matador’s 2025 plan and free cash flow (FCF) allocation priorities, in response to the current state of the oil market. A significant drop in Matador’s stock price has led the company’s management to consider initiating a share repurchase program for the first time in its history.
Additionally, Matador’s Cotton Valley assets are anticipated to be a topic of interest during the conference call, especially given the relative strength of natural gas prices. Scialla’s commentary reflects a mix of caution and acknowledgement of the company’s asset strength amid a fluctuating market environment.
In other recent news, Matador Resources Company has been the subject of multiple analyst evaluations and strategic business developments. Mizuho (NYSE:MFG) Securities adjusted its price target for Matador Resources to $74, while maintaining an Outperform rating, citing expectations of lower oil production volumes and natural gas realizations. Concurrently, JPMorgan revised its price target downward to $61, noting slightly higher cash flow per share projections but lower EBITDA expectations for the first quarter. The company has also sold its Eagle Ford shale assets in South Texas, enhancing its financial position with over $30 million in proceeds and reducing its credit facility debt by $180 million.
KeyBanc Capital Markets reaffirmed its $72 price target for Matador Resources, highlighting the company’s recent well performance as a positive indicator against broader industry trends. Additionally, Benchmark analysts maintained their Buy rating with a $62 price target, projecting higher earnings per share and EBITDA than consensus estimates due to differences in operating costs. Matador Resources is considering a stock repurchase program, alongside maintaining its quarterly dividend, as part of its strategic financial maneuvers. These developments reflect ongoing adjustments and strategic decisions by Matador Resources in response to market conditions and financial forecasts.
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