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On Friday, Truist Securities revised its stance on Murphy Oil Corp . (NYSE:MUR), downgrading the stock from Buy to Hold and reducing the price target from $42.00 to $31.00. The stock, currently trading at $27.47, has declined over 32% in the past six months and is hovering near its 52-week low of $27.15. According to InvestingPro analysis, technical indicators suggest the stock is in oversold territory. The decision by Truist comes amid revised estimates for the company’s capital expenditures, lease operating expenses (LOE), and operating costs, which are expected to impact earnings before interest, taxes, depreciation, and amortization (EBITDA) and free cash flow (FCF). Despite these concerns, InvestingPro data shows Murphy Oil maintains strong fundamentals with an EBITDA of $1.59 billion and an attractive free cash flow yield of 20%.
Analysts at Truist have adjusted their outlook on Murphy Oil’s financial performance, expecting higher costs associated with the company’s strategic shift towards offshore exploration, particularly in the Gulf of Mexico (GoM) and Vietnam. The analysts believe that the focus on offshore operations will entail more expenses than previously anticipated, which may delay the realization of significant upside from these ventures.
Murphy Oil’s inventory of offshore and onshore assets remains robust, but Truist points out that the increased focus on offshore projects will likely lead to material costs in the short term. The firm anticipates that Murphy Oil may invest over $1 billion in Vietnam in the coming quarters before seeing the results of this expenditure.
Despite the downgrade, Truist acknowledges Murphy Oil’s strong per-share growth profile. However, they caution that the upcoming challenges related to offshore development may shift investor attention away from this aspect. Truist also notes the potential for offshore netbacks, or the value received for oil after all costs and taxes, to be lower than typical in future periods.
Murphy Oil’s stock rating adjustment and price target reduction by Truist Securities reflect the firm’s expectations of increased spending and operational challenges that could affect the company’s near-term financial performance. Worth noting, the company trades at a P/E ratio of 10.73 and has maintained dividend payments for 55 consecutive years. For deeper insights into Murphy Oil’s valuation and financial health, InvestingPro subscribers can access the comprehensive Pro Research Report, which includes detailed analysis of the company’s fundamentals and growth prospects.
In other recent news, Murphy Oil Corporation experienced a challenging fourth quarter, with earnings and revenue falling short of expectations. The oil and gas producer announced adjusted earnings per share of $0.35, missing the consensus estimate of $0.69, and reported revenue of $670.96 million, below the projected $763.43 million. Despite these setbacks, JPMorgan analysts maintain a neutral rating for Murphy Oil, albeit with a lowered price target of $33, down from $36.
Recent developments in the company include promising drilling successes and potential resource expansion in several plays, which could lead to positive outcomes in the future. Murphy Oil also outlined a long-term plan for low single-digit production growth, with an annual capital expenditure of $1.1 billion to $1.3 billion. The company’s 2025 production volumes are guided to 178.5 thousand barrels of oil equivalent per day, and they plan to achieve first oil at the LDV field in Vietnam by late 2026.
Murphy Oil has also increased its quarterly dividend by 8% to $0.325 per share for 2025, continuing its 55-year streak of maintaining dividend payments. This information, along with the company’s recent earnings and revenue results, provides a snapshot of Murphy Oil’s recent performance and future plans.
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