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On Monday, Susquehanna has adjusted its outlook on Hess Corp . (NYSE: NYSE:HES) shares, reducing the price target to $151 from the previous $166, while keeping a Neutral rating on the shares. The adjustment follows the company's second-quarter production figures and earnings performance.
Hess Corp. reported a second-quarter production of 493.8 thousand barrels of oil equivalent per day (Mboe/d), which surpassed the forecasted 470.1 Mboe/d. However, the adjusted earnings per share (EPS) of $2.46 for the quarter fell short of expectations by $0.08.
Based on these results, Susquehanna has also provided projections for the coming years, estimating the 2024 and 2025 production to be 486.9 Mboe/d and 502.4 Mboe/d, respectively, with adjusted EPS predicted at $10.44 for 2024 and slightly decreasing to $10.41 for 2025.
The firm's decision to lower the price target to $151 is attributed to the acquisition conversion ratio of Chevron Corp. (NYSE: NYSE:CVX) to Hess shares. This ratio plays a significant role in the valuation and future performance expectations of Hess Corp. stock.
Investors and market watchers will be keeping a close eye on Hess Corp.'s stock performance following this updated guidance from Susquehanna. The new price target reflects the latest financial data and market conditions that could influence the investment decisions regarding Hess Corp.
In other recent news, Chevron Corp reported a shortfall in its second-quarter earnings, with adjusted earnings of $2.55 per share falling short of analysts' expectations of $2.93 per share.
This was primarily attributed to weak refining margins. In addition, the company's planned $53 billion all-stock acquisition of Hess Corp is facing further delays, with the completion of the takeover now postponed to May 2025.
The delay is due to an arbitration process initiated by Exxon Mobil (NYSE:XOM) against the transaction, which involves a right of first refusal in an operating agreement related to the Stabroek Block offshore Guyana. Despite this, both Hess and Chevron remain confident that the arbitration will rule in their favor.
Furthermore, the U.S. Federal Trade Commission is investigating executives from oil companies, including Hess Corp, for possible collusion with the Organization of the Petroleum Exporting Countries. Lastly, an Exxon Mobil-led consortium in Guyana, which includes Hess Corp, reported a 23% increase in revenue in 2023, totaling $11.25 billion.
InvestingPro Insights
In light of the recent analysis by Susquehanna, it's worth considering additional insights from InvestingPro that could further inform investors about Hess Corp.'s (NYSE: HES) current market position. With four analysts revising their earnings upwards for the upcoming period, there is a positive sentiment around the company's future earnings potential. Additionally, Hess Corp. is trading at a low P/E ratio of 15.8 relative to near-term earnings growth, which could indicate that the stock is undervalued compared to its growth prospects. Notably, the company has shown a robust revenue growth of 14.67% over the last twelve months as of Q2 2024.
InvestingPro Tips highlight that Hess Corp. operates with a moderate level of debt and has maintained dividend payments for 38 consecutive years, demonstrating a commitment to returning value to shareholders. The company's stock also generally trades with low price volatility, offering a potentially stable investment option. For those interested in diving deeper into Hess Corp.'s financials and future outlook, additional InvestingPro Tips are available, providing a comprehensive analysis that could aid in making more informed investment decisions.
InvestingPro Data shows a market cap of $41.95 billion and a strong gross profit margin of 76.52% over the last twelve months as of Q2 2024, underlining the company's profitability. Moreover, the operating income margin stands at 36.5%, reflecting efficient operations. For investors seeking further guidance, more detailed tips and metrics can be found on InvestingPro's Hess Corp. page, which includes a fair value estimate of $139.45, offering a reference point for assessing the stock's current price.
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