On Thursday, Roth/MKM maintained a positive outlook on Amplify Energy Corp. (NYSE:AMPY) stock, reiterating a Buy rating and a price target of $9.50. The firm's optimism is bolstered by improved financial forecast for the second quarter (Q2) of 2024, as it anticipates higher earnings per share (EPS), cash flow per share (CFPS), and earnings before interest, taxes, depreciation, and amortization (EBITDA).
The revised estimates for Q2 2024 show an increase in EPS from $0.25 to $0.34, CFPS from $0.54 to $0.61, and EBITDA from $21.5 million to $25.9 million. The adjustment comes after Roth/MKM increased its West Texas Intermediate (WTI) crude oil price estimate for the quarter from $73.00 per barrel to $85.00 per barrel.
Despite a slight decrease in production estimates for Q2 2024 from 19,541 barrels of oil equivalent (BOE) per day to 19,416 BOE per day, the forecast remains largely consistent. The dip is attributed to a limited turnaround at Bairoil and the completion of Phase 2 of the Beta infrastructure electrification and emissions reduction project. The actual production figure for the first quarter (Q1) of 2024 was 20,200 BOE per day.
Looking ahead, Roth/MKM projects an uptick in production for the third quarter (Q3) to 19,998 BOE per day and the fourth quarter (Q4) to 20,598 BOE per day. This anticipated growth is primarily due to development drilling and facility enhancements at Beta, as well as well workovers across other assets.
In the Eagle Ford (NYSE:F) region, Amplify Energy is expected to participate in 13 gross (0.7 net) new development wells and 2 gross (0.4 net) recompletion projects. Additionally, in East Texas, the company is evaluating participation in 3 gross (0.8 net) wells. These non-operated development projects are forecasted to potentially contribute additional volumes in early 2025.
In other recent news, Amplify Energy Corp. has reported robust first-quarter financial results, including an adjusted EBITDA of $24.9 million and free cash flow generation of $2.3 million.
Despite a net loss of $9.4 million primarily due to non-cash losses on commodity derivatives, the company raised its annual guidance, reflecting confidence in its strategic initiatives and anticipated production growth from its Beta development program.
Amplify Energy also highlighted its strong hedging position for oil and gas production through 2026, coupled with a reaffirmed borrowing base of $150 million, contributing to a stable financial outlook.
The company's net debt stood at $112 million as of March 31, 2024. It expects lower operating costs throughout the year and substantial production growth from the Beta development program.
The company also plans to invest 85-95% of capital primarily in Beta projects during the first three quarters. These recent developments underscore Amplify Energy's commitment to its strategic initiatives, including barrel marketing and payroll monetization.
While Amplify Energy reported a net loss of $9.4 million for the quarter, it has generated positive free cash flow in 15 of the last 16 quarters. The company's borrowing base was reaffirmed at $150 million, indicating a strong financial position. These facts underline the company's resilience and optimism about future transformative potential.
InvestingPro Insights
Following Roth/MKM's positive outlook on Amplify Energy Corp. (NYSE:AMPY), a deeper dive into the company's financials through InvestingPro data reveals a mixed picture that investors might find valuable. The company's market capitalization stands at a modest $230.54 million, and it currently has a price-to-earnings (P/E) ratio of 8.05. This P/E ratio suggests that the stock could be undervalued, especially considering the adjusted P/E ratio over the last twelve months as of Q1 2024 is even lower at 6.4. Additionally, Amplify Energy has demonstrated a robust gross profit margin of 44.97% over the same period, indicating effective control over its cost of goods sold.
However, it's worth noting that the company's revenue has declined by 21.27% over the last twelve months as of Q1 2024, which may raise concerns about its growth trajectory. On a brighter note, the quarterly revenue growth for Q1 2024 is up by 14.96%, suggesting some recent improvement in sales performance. In terms of stock price movements, the company has experienced volatility, with a 1-year price total return of -10.6%, yet there's an analyst consensus fair value target of $9.5, hinting at potential upside.
Two InvestingPro Tips for Amplify Energy include the expectation of profitability this year and the fact that the company's short-term obligations currently exceed its liquid assets. These insights could be crucial for investors assessing the company's financial health and future prospects. For those interested in a more comprehensive analysis, there are additional InvestingPro Tips available at: https://www.investing.com/pro/AMPY. Remember to use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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