Thursday, December 12, 2013
3:18 PMApache, Marathon Oil downgraded at Citigroup on valuation
- Apache (APA -0.4%) and Marathon Oil (MRO +1.5%) are downgraded to Neutral from Buy at Citigroup, citing valuation.
- The firm maintains its $95 price target on APA, based on the stock achieving 2014-15 EV/DACF multiples of 5.7x/5.6x based on normalized prices of $90/bbl for WTI and $4.50/MMbtu, and 96% of its revised sum-of-the-parts NAV assessment, which is now $99/share under lower oil price projections.
- The MRO downgrade is accompanied by a reduced $40 price target, down from $42, based on the stock achieving 2014-15 EV/DACF multiples of 6.2x/5.7x based on normalized prices of $90/bbl and $4.50/MMBtu, and 100% of its sum-of-parts NAV assessment based on commodity price forecasts.
11:49 AMJim Cramer touts Marathon Oil as undervalued
- Marathon Oil (MRO +0.6%) shares barely moved yesterday despite positive news from the company's analyst day - in fact, they've been flat for a month - but Jim Cramer thinks bargain hunters may have a deal in MRO at ~$36/share.
- MRO said it plans to raise its rig count in the Bakken and the Eagle Ford by 20%, and they're doubling their rig count in Oklahoma's Woodford shale, areas Cramer believes will transform the oil industry and the nation.
- Cramer likes MRO's plan to sell off cash cow North Sea assets to raise cash and simplify its holdings and calls the increased share buyback "very meaningful," yet the stock is selling for just 11.8x next year's earnings estimates.