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On Tuesday, Texas Capital Securities adjusted its stance on PHX Minerals Inc (NYSE:PHX), downgrading the company’s stock rating from Buy to Hold. The firm also revised its price target to $4.35, down from the previous target of $5.25. This change follows the recent announcement on May 8, 2025, that PHX Minerals Inc. has entered into a definitive agreement to be acquired by WhiteHawk Energy, LLC in an all-cash deal, which values PHX Minerals at $4.35 per share. The deal values the company, which has maintained dividend payments for 42 consecutive years, at approximately $158 million based on current market capitalization.
The acquisition by WhiteHawk Energy is a significant move for PHX Minerals. Texas Capital Securities, in their analysis, expressed the belief that the offered price is equitable and does not foresee any competing bids emerging to challenge the current acquisition terms. The new price target set by Texas Capital Securities aligns with the acquisition offer, indicating that the firm sees limited upside to the stock’s value beyond the agreed transaction price. The market has responded positively to the news, with PHX shares showing a significant 19% return over the past week and currently trading near its 52-week high of $4.34.According to InvestingPro, PHX Minerals demonstrates strong financial health with robust metrics across multiple dimensions. Subscribers to InvestingPro gain access to 14 additional exclusive ProTips and comprehensive analysis through the Pro Research Report, offering deeper insights into PHX’s valuation and market position.
Texas Capital Securities’ downgrade reflects a shift in their investment outlook for PHX Minerals, suggesting that investors may want to maintain their positions without adding further, as the acquisition price has set a clear expectation for the stock’s near-term performance. The adjustment to a Hold rating typically indicates that analysts believe the stock will perform in line with the market or sector averages in the foreseeable future. The company’s current valuation appears fair according to InvestingPro’s Fair Value analysis, with the stock maintaining strong fundamentals including a healthy current ratio of 1.8 and moderate debt levels.
The acquisition deal is poised to conclude with PHX Minerals shareholders receiving $4.35 in cash for each share they own. This all-cash transaction will result in PHX Minerals becoming a privately-held company under the umbrella of WhiteHawk Energy, LLC, removing its shares from public trading on the NYSE once the deal is finalized.
Investors and market watchers will now be observing the progression of this acquisition, as PHX Minerals prepares to transition into its new ownership structure. The adjustment by Texas Capital Securities to both the rating and price target of PHX Minerals is a direct response to this impending corporate action.
In other recent news, PHX Minerals Inc. reported its fourth-quarter 2024 earnings, exceeding expectations with an earnings per share (EPS) of $0.04, doubling the forecasted $0.02. However, the company fell short of revenue expectations, posting $8.02 million against a projected $8.71 million. Despite this revenue miss, PHX Minerals demonstrated a commitment to financial improvement by reducing its total debt from $29.5 million to $19.8 million. The company also reported a 13% increase in quarterly revenues to $8.9 million compared to the previous quarter, although full-year revenues saw an 8% decline to $33.7 million year-over-year. Additionally, PHX Minerals made amendments to its corporate bylaws, removing the timing requirement for annual stockholder meetings, which allows more flexibility in scheduling. This change was detailed in a recent SEC filing, ensuring transparency for investors. The company remains optimistic about its 2025 prospects, with future EPS and revenue forecasts suggesting gradual growth.
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