Magnolia Oil & Gas Corp. (MGY) PT Raised to $26 at JPMorgan

JPMorgan analyst Michael Glick raised the price target on Magnolia Oil & Gas Corp. (NYSE: MGY) to $26.00 (from $25.00) while maintaining a Neutral rating.

The analyst comments "JPM View: We forecast a slight cash flow/EBITDA miss on in-line operations after marking to market for 4Q commodity prices. We estimate 4Q24 CFPS of $1.11, 4% below the STe at $1.15. Our EBITDA estimate of $234 MM is a touch below the STe at $235 MM. We are modeling 4Q oil production of 39.0 MBo/d and total production of 93.0 MBoe/d, both of which are on top of the STe and in-line with MGY’s 4Q guidance of 93.0 MBoe/d. We have lowered our 4Q gas price realization to $1.94 per Mcf as a majority of MGY’s gas is priced at daily average ($2.26 per Mcf) vs bid week ($2.49 per Mcf) at HSC. We also expect GP&T expense to move higher given the move in gas/NGL prices, and we have increased our GP&T estimates for 4Q and 2025 to $1.55 per boe (vs $1.28 per boe in 3Q24). Another nuance to the 4Q print is that MGY realized some modest fees associated with the $400 MM note offering during the quarter. We are modeling ~$5 MM in fees that impact our cash flow estimates. Our 4Q capex estimate of $125 MM aligns with both the STe and MGY’s guidance. We forecast that MGY will deliver $93 MM of FCF during the quarter. We are modeling cash return of $77 MM for the quarter, inclusive of MGY’s $0.13 per share quarterly dividend and $52 MM of buybacks. We continue to highlight positive trends in 2024 well productivity in both Giddings and Karnes (see Figure 1- Figure 4), which could provide modest upside to our production estimates if the trend continues. For FY25, we are modeling total volumes of 95.6 MBoe/d (+7% YoY) and oil volumes of 39.4 MBo/d (+3% YoY) as we expect MGY’s production base to trend modestly gassier over time given more Giddings development. We are modeling FY25 capex of $475 MM, which is 1% below the STe at $482 MM and flat YoY. We forecast that MGY will generate $462 MM of FCF in FY25, a 9.3% FCF yield. We maintain our Neutral rating and increase our Dec-25 PT to $26 (from $25) after updating for recent strip pricing."

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