On Wednesday, Mizuho Securities maintained its positive stance on Matador Resources Company (NYSE:MTDR), reiterating an Outperform rating with a steady price target of $74.00.
The firm's analysis highlighted Matador's recent financial performance, noting a modestly positive stock reaction to the company's announcement. Matador Resources reported an approximate 2% EBITDX beat, with oil production volumes aligning with expectations and reaching nearly the top end of their guidance.
The company also surpassed free cash flow expectations due to capital expenditures being roughly 6% lower than anticipated. This was mainly attributed to approximately $20 million in drilling, completion, and equipment (DC&E) cost savings.
Looking ahead, Matador's fourth-quarter 2024 oil production guidance is viewed as reasonable and is expected to address any remaining concerns regarding the temporary decline in Ameredev volumes, which are projected to rebound and grow into 2025.
Matador Resources has shared a preliminary outlook for 2025, forecasting production to exceed 200 thousand barrels of oil equivalent per day (mboe/d), with oil production surpassing 120 thousand barrels per day (mbbl/d). This outlook is positive compared to the current consensus, which estimates around 201 mboe/d and approximately 121 mbbl/d.
Mizuho's forecasts are even more optimistic, projecting higher production volumes of around 207 mboe/d and 126 mbbl/d, while anticipating similar total capital expenditures of approximately $1.6 billion.
The firm's continued support for the Outperform rating and the $74 price target reflects confidence in Matador Resources' operational efficiency and growth prospects. The company's performance and strategic cost management appear to position it well for the anticipated production increases in the coming year.
In other recent news, Matador Resources reported notable third-quarter earnings that outperformed analyst expectations. The oil and gas producer posted adjusted earnings of $1.89 per share, surpassing the consensus estimate of $1.67 per share. However, the company's revenue of $770.2 million fell short of the projected $842.81 million.
In addition to its earnings, Matador achieved record oil and natural gas production levels in Q3, averaging 171,480 barrels of oil equivalent per day, marking a 27% increase compared to the same period last year. Matador's recent acquisition of Ameredev assets, which closed in September, is already exceeding expectations with production from the acquired assets averaging 31,500 barrels of oil equivalent per day.
Furthermore, Matador has raised its full-year 2024 production guidance and now expects total oil equivalent production of 167,500 to 172,500 barrels of oil equivalent per day. This is an increase from its previous outlook of 158,500 to 163,500 barrels of oil equivalent per day.
The company has also increased its capital expenditure guidance for 2024 by $50 million to a range of $1.35 billion to $1.60 billion, citing accelerated completion of wells on newly acquired properties. These are among the recent developments that have been unfolding at Matador Resources.
InvestingPro Insights
Matador Resources Company's (NYSE:MTDR) recent performance and future outlook, as highlighted by Mizuho Securities, are further supported by key financial metrics and insights from InvestingPro. The company's P/E ratio of 6.5 suggests that it may be undervalued relative to its earnings, which aligns with Mizuho's optimistic price target of $74.00.
InvestingPro data reveals that Matador's revenue growth stands at 16.81% over the last twelve months, with a particularly strong quarterly revenue growth of 31.71% in Q2 2024. This robust top-line performance supports the company's ability to meet and potentially exceed production forecasts for 2025, as mentioned in the article.
Additionally, InvestingPro Tips highlight that Matador has raised its dividend for 4 consecutive years, with a current dividend yield of 1.99%. This demonstrates the company's commitment to returning value to shareholders, which could be attractive to income-focused investors.
For readers interested in a more comprehensive analysis, InvestingPro offers 5 additional tips for Matador Resources, providing a deeper understanding of the company's financial health and market position.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.