Laredo Petroleum's Lower Price Environment Prompts 16% Price Target Cut By This Analyst

Author: Shivani Kumaresan | December 12, 2022 01:35pm

• Raymond James analyst John Freeman reiterated an Outperform rating on the shares of Laredo Petroleum Inc (NYSE:LPI) and lowered the price target from $75 to $63.
• The analyst said Laredo did not have the best quarter after having run into some operational issues.
• The analyst added that they moved production guidance for the year lower thanks to offset fracs causing lackluster performance.
• The analyst also moved his full year 2023 capex up to ~$650 million to account for further inflation, and a second spot crew LPI will be running in the front half of the year.
• That being said, even after oil prices have taken a sharp turn lower, the analyst anticipated about $150 million of free cash flow (FCF), with the majority going toward share repurchases and debt reduction.
• The analyst specified that the company is already at ~1.2x debt/EBITDA with plenty of liquidity, having done some serious work on the balance sheet in the last two years.
• The analyst said the lowered price target accounts for a lower price environment.
• Price Action: LPI shares are trading higher by 1.21% at $50.90 on the last check Monday.

Posted In: LPI