On Wednesday, CFRA, a well-known investment research firm, revised its price target for Matador Resources Company (NYSE:MTDR), reducing it to $60.00 from the previous $75.00, while still recommending the stock as a Buy. The adjustment in the price target reflects a $15 decrease and is based on a 4.6x multiple of enterprise value to projected 2025 EBITDA, which aligns with MTDR's historical forward average.
The firm also revised its earnings per share (EPS) estimates for Matador Resources, lowering the 2024 EPS estimate by $0.52 to $7.53 and the 2025 estimate by $1.70 to $7.92. The company's third-quarter earnings per share of $1.89 fell short of CFRA's estimate by $0.05.
Matador Resources completed the acquisition of Ameredev on September 18, which added approximately 26,000 barrels of oil equivalent per day (boe/d) to its production, accounting for 15% of MTDR's third-quarter volumes. The company's operations in the Delaware Basin remain a primary focus, and despite some concerns regarding takeaway access, Matador's ownership of midstream assets is seen as a mitigating factor.
CFRA also expressed a more cautious outlook on crude oil prices than in their previous assessment in July. The firm suggests that the Energy Information Administration's (EIA) projection for West Texas Intermediate (WTI) crude at $73 per barrel in 2025 might be overly optimistic. However, it is noted that Matador has hedged about 37% of its estimated 2025 crude oil production, with a floor price of $60 per barrel and a cap at $86 per barrel.
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