On Monday, KeyBanc has increased the price target for Gulfport Energy (OTC:GPORQ) (NYSE: GPOR) shares, moving the goalpost from $143.00 to $160.00, while keeping an Overweight rating on the stock. The adjustment comes after an evaluation of the company's financial modeling and performance.
The firm noted that Gulfport Energy's strategic moves, including the significant reduction in maintenance capital expenditures and the use of free cash flow to buy back shares, have amplified the value per share. In 2023, the company repurchased $149 million worth of shares, a decision that has contributed to the positive reassessment.
The analyst sees further potential for Gulfport Energy's stock to re-rate in comparison with its industry counterparts, following a 2024 outlook that surpassed expectations. The company's lower than anticipated maintenance drilling and completion capital expenditures, which stand at $345 million, are expected to boost free cash flow.
In addition, Gulfport's hedging strategy, with 61% of its 2024 estimated natural gas production hedged at $3.69 per thousand cubic feet, provides a layer of financial stability.
Gulfport Energy's market performance has been notable, with its shares soaring by 81% in 2023, outpacing the S&P Oil & Gas Exploration & Production Select Industry Index (XOP), which only saw a 1% increase. Year-to-date, the company's shares have continued to outperform, rising by 7% compared to the XOP's 4% gain. This success has expanded Gulfport's market capitalization to $2.6 billion.
The larger market capitalization and the resulting stronger equity position enhance Gulfport's strategic flexibility. KeyBanc suggests that Gulfport's effective management and execution in both drilling and financial aspects position the company as a potential acquirer in the market, contrasting with earlier expectations that it might be sold to a larger entity after emerging from restructuring.
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