On Friday, Roth/MKM maintained its Buy rating and $9.50 stock price target for Amplify Energy Corp. (NYSE:AMPY), despite a slight reduction in the company's third-quarter production forecast. The firm's analysis indicates that Amplify Energy's daily production for the third quarter of 2024 is expected to be 19,849 barrels of oil equivalent (BOE), a small decrease from the previous estimate of 20,635 BOE per day.
The revised full-year 2024 production estimate now stands at 20,151 BOE per day, which still falls within the company's guided range of 19,000 to 21,000 BOE per day. This adjustment in production estimates is attributed to the actual commodity prices for the third quarter of 2024 being lower than previously anticipated.
As a consequence of the reduced production forecast and lower commodity prices, the firm has adjusted its earnings projections for Amplify Energy. The third-quarter earnings per share (EPS), cash flow per share (CFPS), and earnings before interest, taxes, depreciation, and amortization (EBITDA) are now expected to be $0.32, $0.55, and $25.2 million, respectively. These figures represent a decrease from the initial estimates of $0.38 EPS, $0.60 CFPS, and $27.9 million EBITDA.
The revised financial metrics reflect the impact of the modest decline in production and the shift in commodity price expectations. Despite these changes, Roth/MKM's stance on Amplify Energy remains positive, as evidenced by the reaffirmed Buy rating and price target. The firm's outlook suggests confidence in the company's performance and valuation despite the recent adjustments to production and earnings estimates.
In other recent news, Amplify Energy Corp. has seen a robust second quarter in 2024, with a significant increase in net income and free cash flow. The company reported an adjusted EBITDA of $30.7 million and free cash flow of $9.2 million.
This strong performance has led to an update in the company's annual guidance. Production averaged around 20,300 barrels of oil equivalent per day, with lease operating expenses dropping to $36.3 million. Amplify Energy's net income improved to $7.1 million, with net debt standing at approximately $117.5 million.
In addition, Roth/MKM has maintained its Buy rating on Amplify Energy, citing an improvement in the company's projected production estimate for the third quarter of 2024. The firm expects production to increase from 19,998 to 20,635 barrels of oil equivalent per day, due to successful operations at the Beta field and completion of maintenance at the Bairoil field.
However, the firm warns that the proposed divestiture of the Bairoil field could significantly alter the financial projections for 2025. These are recent developments in Amplify Energy's operations and strategic decisions that may shape its financial outlook.
InvestingPro Insights
To complement Roth/MKM's analysis, InvestingPro data offers additional insights into Amplify Energy's financial position. The company's market capitalization stands at $274.22 million, with a price-to-earnings (P/E) ratio of 10.15, indicating a relatively modest valuation compared to earnings. This aligns with the firm's maintained Buy rating and price target.
InvestingPro Tips highlight that Amplify Energy has been profitable over the last twelve months, supporting the positive outlook. However, it's noted that net income is expected to drop this year, which could explain the slight reduction in production forecasts and earnings estimates mentioned in the article.
The company's revenue for the last twelve months as of Q2 2023 was $311.56 million, with a gross profit margin of 46.7%, suggesting a healthy operational efficiency despite challenges. This data provides context to the production figures discussed in the analysis.
For investors seeking a more comprehensive understanding, InvestingPro offers 6 additional tips for Amplify Energy, providing a broader perspective on the company's financial health and market position.
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