On Tuesday, JPMorgan updated its assessment of Murphy Oil Corp (NYSE:MUR), increasing the price target to $40.00 from the previous $39.00, while maintaining a Neutral rating. The firm's analysis comes amid leadership changes at Murphy Oil, with Eric Hambly set to become CEO by the year's end, succeeding Roger Jenkins. The company is expected to maintain its strategic course following the transition, with no significant changes anticipated.
Murphy Oil's third-quarter update is projected to show mixed results, with earnings per share (EPS) and cash flow per share (CFPS) estimates of $0.58 and $2.34, respectively, falling short of the street estimates (STe) of $0.74 and $2.73. Similarly, the EBITDAX estimate of $391 million is below the consensus of $432 million. Production volumes are forecasted to be at the higher end of the company's guidance range, with an expectation of 188 thousand barrels of oil equivalent per day (MBoe/d).
In terms of production, Murphy Oil forecasts an increase in the fourth quarter, driven by incremental outputs from various assets and reduced storm-related downtime. The company anticipates a sequential rise of 8 to 9 MBoe/d, with full-year volumes expected to average 181 MBoe/d. During the third quarter, Murphy Oil initiated drilling at the Sebastian #1 well in the Gulf of Mexico (GoM), with a 33% working interest and a net well cost estimated at $15 million.
The company has also been active in share buybacks, disclosing the repurchase of approximately $94 million of stock in the third quarter. Year-to-date, Murphy Oil has bought back around $200 million of shares at an average price of $39.08 per share. The analyst's model forecasts 2024 production of 181 MBoe/d with a capital expenditure (capex) of $974 million and 2025 volumes of 184 MBoe/d at $1,107 million in capex.
The updated price target of $40 reflects an increase in commodity prices since the last analysis and is based on the shares trading at 65% of the firm's updated blended net asset value (NAV). Murphy Oil's financial performance and strategic developments, including the CEO transition and exploration activities, will continue to be closely watched by investors and analysts alike.
In other recent news, Murphy Oil Corporation (NYSE:MUR) has been making significant financial moves, including exceeding its second-quarter production guidance with a net income of $128 million and adjusted EBITDA of $396 million. The company announced a $600 million offering of Senior Notes due in 2032 and initiated tender offers to buy back up to $600 million of its outstanding senior notes due in 2027, 2028, and 2029.
Murphy Oil also declared a quarterly cash dividend of $0.30 per share. In leadership transitions, the company announced that Eric M. Hambly is set to become the President and Chief Executive Officer in 2025. Additionally, Robert B. Tudor, III, was appointed to its Board of Directors, bringing extensive experience from his tenure at Goldman Sachs and his current role at Artemis Energy Partners.
Analysts from Wells Fargo and JPMorgan have made adjustments to their outlook on Murphy Oil, with Wells Fargo reducing their price target to $41 and maintaining an Equal Weight rating, and JPMorgan downgrading the stock from Overweight to Neutral and reducing the price target to $47.
In a concerning development, U.S. authorities have arrested a British individual, Robert Westbrook, on charges of hacking into the computer systems of undisclosed companies, including Murphy Oil, to gain insider information on their expected earnings.
InvestingPro Insights
Murphy Oil's financial metrics and market performance offer additional context to JPMorgan's analysis. The company's P/E ratio of 8.66 (adjusted for the last twelve months as of Q2 2024) suggests that the stock may be undervalued relative to its earnings, aligning with JPMorgan's increased price target. This is further supported by InvestingPro's fair value estimate of $40.28, which closely matches JPMorgan's new target of $40.00.
InvestingPro Tips highlight Murphy Oil's strong dividend history, having maintained payments for 54 consecutive years and raised dividends for the past three years. This commitment to shareholder returns is reflected in the current dividend yield of 3.38%, which may appeal to income-focused investors. Additionally, the company's profitability over the last twelve months and analysts' expectations of profitability this year reinforce JPMorgan's neutral stance.
It's worth noting that InvestingPro offers 7 additional tips for Murphy Oil, providing investors with a more comprehensive analysis 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.