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Investing.com - Wells Fargo raised its price target on Permian Resources Corp (NYSE:PR) to $21.00 from $20.00 on Wednesday, while maintaining an Overweight rating on the stock. The $10.64 billion market cap company currently trades at $13.38, with InvestingPro analysis indicating the stock is trading below its Fair Value.
The price target increase follows Permian Resources’ second-quarter performance, which met what Wells Fargo described as "already high expectations," though the company’s updated fiscal year 2025 guidance came in line with expectations without providing upside. The company maintains strong fundamentals with a 74% gross profit margin and impressive revenue growth of 16.4% over the last twelve months.
Wells Fargo cited Permian Resources’ "differentiated Permian inventory depth and sustained capital efficiency" as reasons for maintaining its positive outlook, despite the stock underperforming after earnings. Trading at a P/E ratio of 8.2 and a PEG ratio of 0.44, InvestingPro data suggests the stock offers value relative to its growth potential. Get access to 7 more exclusive ProTips and comprehensive analysis with an InvestingPro subscription.
The firm adjusted its estimates for third-quarter and fiscal years 2025 and 2026 to reflect updated production volumes, operating expenses, commodity price realizations, and cost-deflation assumptions. At recent strip pricing, Wells Fargo forecasts fiscal year 2025 free cash flow generation of $1.6 billion.
Wells Fargo projects oil production of 182.2 thousand barrels per day in the third quarter of 2025 and 181.8 thousand barrels per day in the fourth quarter, with expected drilling and completion costs declining further in the second half of 2025 due to continued efficiency gains and modest oilfield services deflation.
In other recent news, Permian Resources reported its second-quarter 2025 earnings, which showed a slight miss on both earnings per share (EPS) and revenue compared to analyst forecasts. The company posted an EPS of $0.27, which was below the expected $0.29, and revenue of $1.2 billion, falling short of the anticipated $1.23 billion. Despite these results, UBS reiterated its Buy rating on Permian Resources, maintaining a price target of $16.00. UBS highlighted that the company exceeded expectations in terms of EBITDAX and total production for the quarter. The firm also noted improvements in near-term free cash flow driven by enhanced capital efficiency and favorable tax conditions. These developments reflect mixed performance indicators for the company, with some areas surpassing forecasts while others did not meet expectations.
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