UPDATE: Susquehanna Upgrades Marathon Oil (MRO) to Positive
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Susquehanna upgraded Marathon Oil (NYSE: MRO) from Neutral to Positive with a price target of $32.00 (from $25.00).
The analyst comments "We had been on the sidelines on MRO due to concerns about the depth of its drilling inventory. Although not much has changed on that front, the company’s commitment to return the majority of its free cash flow to investors via share repurchase means MRO is not depleting its inventory on a per-share basis as fast as some of its peers. As we discussed in our February 2 note (Link), we think share repurchase is a more efficient method for companies to return capital to shareholders given most operators are not doing much work on the exploration side. We estimate MRO will generate ~$3.4B of free cash flow after base dividends this year at our $91/$5.20 price deck and another $2.4B next year ($80/$4.25 deck). For illustrative purposes, at our 2023 price deck (which we think could be a normalized deck for the next few years), MRO could technically repurchase ~10% of its outstanding shares annually at our $32 target price, though that’s not our assumption. We think the company could build up some cash on the balance sheet so it can maintain a more consistent repurchase program through commodity cycles. Overall, although MRO has been one of the top performers ytd in our E&P coverage universe, the company still screens among the leaders on free cash flow yield."
Shares of Marathon Oil closed at $25.00 yesterday.
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Create E-mail Alert Related CategoriesAnalyst Comments, Analyst PT Change, Upgrades
Related EntitiesSusquehanna International Group of Companies
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