Marathon Oil Corporation: A Mixed Performance Amid Market Changes
Strong Presence in U.S. Energy Markets
Valued at a market cap of around $16 billion, Texas-based Marathon Oil Corporation (MRO) stands as a dynamic player in the energy sector, leveraging its expertise in four premier U.S. resource plays: Eagle Ford, Bakken, Permian, and Oklahoma’s STACK and SCOOP formations. Complementing its domestic strength is a world-class integrated gas business in Equatorial Guinea.
Stock Performance Compared to the Market
Shares of this energy giant have risen approximately 12.5% over the past year and 18.3% year-to-date (YTD). However, this performance falls short of the broader S&P 500 Index’s ($SPX) impressive annual return of 30.4% and YTD gains of 23.1%.
Narrowing the focus, MRO stock has actually outperformed the Energy Select Sector SPDR Fund’s (XLE) 12% return in the last 52 weeks and its 13% YTD gain.
Merger Plans Advancing
Despite the stock’s relative underperformance, Marathon Oil is making strides with its merger plan with ConocoPhillips (COP), first announced in May. With the deal expected to close by late Q4 of fiscal 2024, the momentum increased on August 29 when Marathon secured crucial shareholder approval, resulting in a more than 2% increase in its shares that same day.
Analysts’ Outlook on Earnings
For the current fiscal year ending in December, analysts project MRO’s earnings will decrease by 9.6% annually to $2.36 per share. The company’s earnings record is mixed, having surpassed consensus estimates in three of the last four quarters, while also failing to meet expectations once.
Wall Street Ratings Show Caution
Overall, Wall Street appears cautiously optimistic about Marathon Oil’s stock, with a consensus rating of “Moderate Buy.” Among 19 analysts providing recommendations, eight endorse a “Strong Buy,” one recommends a “Moderate Buy,” and the remaining ten suggest “Hold.”
This distribution of ratings has remained stable over the past three months.
Price Target Adjustments
On October 2, RBC lowered its price target for Marathon Oil from $36 to $34, while holding its “Outperform” rating. The mean price target sits at $31.05, suggesting an 8.6% potential upside from current levels. The highest target of $37 indicates MRO could increase by as much as 29.4% moving forward.
On the date of publication, Anushka Mukherjee did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
