On Wednesday, JPMorgan analyst increased the stock price target for Matador Resources Company (NYSE:MTDR) shares to $75.00, up from the previous target of $72.00, while maintaining an Overweight rating on the stock.
The analyst anticipates a positive operational performance from the company, albeit with cash flow per share (CFPS) and earnings before interest, taxes, depreciation, and amortization (EBITDA) estimates that fall below the street's expectations after adjustments to market conditions.
In the third quarter earnings call, Matador Resources provided preliminary guidance for the full year 2025, forecasting production to exceed 200 thousand barrels of oil equivalent per day (MBoe/d). The company's fourth-quarter earnings release is expected to include formal guidance for 2025.
Matador Resources indicated that drilling and completion (D&C) capital expenditures will increase year-over-year in 2025, as the company plans to operate nine rigs throughout the year, compared to only part of the year for the ninth rig in 2024.
However, this increase is expected to be offset by a reduction in midstream spending, with projected expenditures ranging between fiscal year 2024 levels (approximately $225 million) and maintenance capital expenditures ($50-$75 million) in fiscal year 2025.
Following the completion of the Pronto drop down transaction to San Mateo in December, Five Point will fund 49% of the remaining expenses for the Marlan plant. JPMorgan estimates that Matador Resources will achieve production volumes of 122.5 MBoe/d in fiscal year 2025 with a capital expenditure of $1.51 billion, which includes $1.36 billion in D&C capex and $153 million in midstream capex. These figures are in close alignment with the street's estimates of 123.0 MBoe/d and $1.52 billion in capital expenditures.
The analyst forecasts that Matador Resources will generate free cash flow of $1.029 billion in 2025, reflecting a 13% free cash flow yield. For the fourth quarter, JPMorgan's CFPS estimate of $4.75 is slightly below the street's estimate of $4.77, while the adjusted EBITDA estimate of $624 million is also below the street's expectation of $647 million.
Oil production for the quarter is projected at 119.9 MBoe/d, which is marginally higher than the street's estimate of 119.6 MBoe/d and exceeds Matador Resources’ own guidance range.
Despite some reported delays in third-party facility connections during the fourth quarter, well productivity in the Delaware Basin has shown year-over-year improvement. JPMorgan estimates fourth-quarter capital expenditures for Matador Resources to be $309 million, aligning with the street's estimate of $312 million. The company's marketing business is expected to continue benefiting from weakness in the Waha region, although margins are projected to decrease to $10 million from $20 million in the third quarter.
Matador Resources is estimated to generate $284 million in free cash flow for the fourth quarter. After updating their model with recent strip pricing, JPMorgan reiterated their Overweight rating and increased their December 2025 price target for Matador Resources.
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