Tuesday, Wells Fargo adjusted its outlook on Vital Energy (NYSE:VTLE), shares reducing the price target to $54 from $57, while keeping an Equal Weight rating on the stock.
The adjustment comes after a detailed review of the company's second quarter and full-year 2024 guidance, as well as changes to production forecasts, price realizations, operating expenses, and well cost assumptions.
The firm's revised estimates for Vital Energy's second quarter earnings per share (EPS), earnings before interest, taxes, depreciation, amortization, and exploration (EBITDAX), and free cash flow (FCF) reflect lower gas price realizations and higher lease operating expenses (LOE). These downward pressures were partially mitigated by an increase in production volumes.
According to Wells Fargo's analysis, based on the current market conditions and the firm's pricing models, Vital Energy is projected to generate approximately $294 million in free cash flow, excluding working capital changes, for the full year of 2024, with an anticipated increase to around $319 million for the following year.
The decrease in the price target to $54 represents 65% of the net asset value (NAV) as calculated by Wells Fargo. The Equal Weight rating suggests that the firm's view on the stock is neutral, indicating that it expects Vital Energy's stock performance to be in line with the average returns of the companies covered by Wells Fargo analysts.
InvestingPro Insights
As investors consider Wells Fargo's updated perspective on Vital Energy (NYSE:VTLE), real-time data from InvestingPro provides a comprehensive view of the company's financial health. Vital Energy's market capitalization stands at $1.68 billion, reflecting its position in the energy sector. The company's P/E ratio, a measure of its current share price relative to its per-share earnings, is notably low at 2.36, hinting at potential undervaluation by the market. However, when adjusted for the last twelve months as of Q1 2024, the P/E ratio is slightly higher at 3.06. Furthermore, revenue growth has been mixed, with a slight decline of -1.36% over the last twelve months as of Q1 2024, but a significant quarterly increase of 45.06% in Q1 2024, indicating potential for growth.
Among the InvestingPro Tips for Vital Energy, it's important to note that analysts have revised their earnings downwards for the upcoming period, and the stock has experienced a notable decline over the last week. Additionally, while the stock is known to trade with low price volatility, recent price movements have been quite volatile. For those interested in further analysis, InvestingPro offers additional tips on Vital Energy, and readers can use the coupon code PRONEWS24 to get an extra 10% off a yearly or biyearly Pro and Pro+ subscription. With these insights, investors can better assess Vital Energy's outlook in the context of Wells Fargo's revised price target and Equal Weight rating.
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