On Friday, Jefferies, a global investment banking firm, upgraded YPF S.A. (NYSE: YPF) stock from Hold to Buy, raising the price target to $30.00, up from the previous $23.50.
This adjustment reflects a more optimistic outlook on the company's potential to increase profitability in its upstream operations, accelerate production from the Vaca Muerta shale formation, and realize value from its subsidiaries, YPF Luz and Profertil.
The firm's analysts highlight that YPF has shown strong performance year-to-date but believe the market has yet to recognize the company's potential fully.
The revised price target is backed by updated earnings before interest, taxes, depreciation, and amortization (EBITDA) estimates for 2025-26 that are approximately 10% higher than the consensus on FactSet, a financial data and software company.
According to Jefferies, YPF's enterprise value to debt-adjusted cash flow (EV/DACF) multiple for the year 2026 is estimated at 3.1 times, which is about 10% cheaper compared to its industry peers Petrobras (PBR) and Ecopetrol (EC). This valuation gap is expected to narrow as the company's strategic transformation becomes more evident to the market.
The firm's positive stance on YPF is rooted in the company's potential to unlock hidden value and improve its financial metrics. The upgraded rating and new price target suggest that Jefferies sees a favorable investment opportunity in YPF shares.
InvestingPro Insights
In line with the upgraded outlook from Jefferies, InvestingPro data and tips offer additional insights into YPF S.A. (NYSE: YPF). A key InvestingPro Tip highlights YPF as a prominent player in the Oil, Gas & Consumable Fuels industry, which underscores the company's significant role in the sector. Additionally, analysts predict that YPF will be profitable this year, aligning with Jefferies' optimistic view on the company's potential to increase profitability.
From a financial perspective, the latest InvestingPro Data indicates that YPF's market capitalization stands at $11.99 billion. The company's price-to-earnings (P/E) ratio is currently negative at -16.15, reflecting challenges in profitability over the last twelve months. However, the adjusted P/E ratio for the last twelve months as of Q2 2024 is 23.54, suggesting expectations of future earnings growth. Moreover, the impressive revenue growth of 243.15% over the same period signals a strong increase in the company's sales.
Investors should note that YPF's stock price movements have been quite volatile, yet the company has shown a high return over the last year with a 53.59% price total return. This volatility, coupled with the company's strong performance, may present opportunities for investors with a higher risk tolerance. For those seeking a deeper dive into YPF's potential, there are additional InvestingPro Tips available, providing a comprehensive analysis of the company's financial health and market position.
With these insights, investors can gain a more nuanced understanding of YPF's investment potential beyond the upgrade from Jefferies. For further details and tips, investors can explore the full range of analysis on InvestingPro.
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