Hess Shares Soar After Blowout Quarterly Earnings; Target Price $86

Hess Corporation, an independent oil & gas exploration and production company, reported earnings way above what Wall Street had expected for the first quarter of 2021, sending its shares up over 7% on Wednesday.

The energy company said its net income was $252 million, or $0.82 per common share, compared with a net loss of $2,433 million, or $8.00 per common share in the first quarter of 2020. That was more than double the market expectations of $0.36 per share.

Following this, Hess shares surged as much as 7.7% to $75.93 on Wednesday.

However, Hess cut its forecasts for net production, excluding Libya, to be 290,000 boepd to 295,000 boepd from previous guidance of nearly 310,000 boepd.

Analyst Comments

HES beat 1Q EBITDAX estimates by 25% owing to abberationally higher pricing from February’s polar vortex. Oil ex-Libya missed by 1% on weather-related impacts in the Bakken though capex was 31% below consensus. FY capex was maintained at $1.9bn but production guidance was lowered by 6% largely due to NGL POP accounting in the Bakken. We expect a largely neutral response to the print,” noted David Deckelbaum, equity analyst at Cowen.

Hess Corp Stock Price Forecast

Ten analysts who offered stock ratings for Hess Corp in the last three months forecast the average price in 12 months of $86.78 with a high forecast of $110.00 and a low forecast of $73.00.

The average price target represents a 14.50% increase from the last price of $75.79. Of those 10 analysts, nine rated “Buy”, one rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $82 with a high of $121 under a bull scenario and $41 under the worst-case scenario. The firm gave an “Overweight” rating on the oil & gas exploration and production company’s stock.

“Differentiated rate of change story underpinned by highly economic, long-cycle growth in Guyana balanced by short-cycle optionality in the Bakken. As Guyana production comes online HES‘ breakeven oil price is set to fall from over $70/bbl in 2019 to <$40/bbl by 2025,” noted Devin McDermott, equity analyst at Morgan Stanley.

“Guyana – underappreciated “crown jewel” asset. Guyana asset offers high return economics and underappreciated upside potential as management derisks future development. Rapid payback contract structure puts economics on par to better than most conventional and unconventional developments. Bakken also offers upside. Management’s Bakken target appears conservative as the company shifts to a new completion design.”

Several other analysts have also updated their stock outlook. Raymond James lowered the target price to $90 from $92. Cowen and company lifted the target price to $73 from $60. Susquehanna upped the price target to $83 from $72.

Moreover, CFRA increased the target price to $72. Scotiabank raised the target price to $75 from $71. Credit Suisse lifted the price target to $70 from $58. JP Morgan upped the price target to $80 from $69.

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