Marathon Oil Corp (MRO)

[crudeoil24]

CFRA KEEPS STRONG BUY OPINION ON SHARES OF MARATHON OIL > November 2018 (CFRA) Print
We cut our 12-month target price by $2, to $26, a 5.5X multiple of price to projected '19 operating cash flow, slightly above MRO's historical forward average. We raise our '18 EPS estimate by $0.08 to $0.82, and '19's by $0.23 to $1.42. Q3 EPS of $0.24, vs. a loss per share of $0.08, beat the consensus estimate by $0.04. MRO continues to boost its anticipated production growth without also raising its capital spending plans, which we see as a testament to improved completion efficiencies (completed well costs per foot of lateral length are down 20% year over year). We continue to see MRO as a well-diversified E&P with top-quartile free cash flow potential in '19, along with solid debt metrics. MRO still has $1.0 billion of share repurchase authorization, and with shares trading at a significant relative discount, we would not be surprised to see the company exercise that authorization. Shares also yield 1.1%.