Pioneer Natural Res (PXD) Updated Valuation - Aug 10

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dan_s
Posts: 34471
Joined: Fri Apr 23, 2010 8:22 am

Pioneer Natural Res (PXD) Updated Valuation - Aug 10

Post by dan_s »

PXD was trading at $217 at the time of this post.

TipRanks: "In the last 3 months, 16 ranked analysts set 12-month price targets for PXD. The average price target among the analysts is $292.19. The 16 price targets range from $244 to $350."

I have updated my forecast/valuation model for PXD, lowering my valuation from $360 to $317.

Why?
> None of their production is hedged except for some basis differentials, so I think the oil price risk justifies a lowering of my valuation multiple from 7.5 to 7.0 X annualized operating cash flow per share.
> PXD is on track to generate over $8 billion of free cash flow this year.
> This is why I moved PXD from the Sweet 16 Growth Portfolio to the High Yield Income Portfolio.
Quarterly Fixed + Variable Dividends paid this year.
> Paid 3/14/2022 = $3.78
> Paid 6/14/2022 = $7.38
> To be paid 9/16/2022 = $8.57
> My forecast for the December dividend is $7.06
> My forecast for total 2023 dividends is $27.97 based on expected payout of ~57% of operating cash flow per share.

PXD is also aggressively buying back shares, so as the outstanding share count goes down the dividends should go up.

Bottomline: IMO PXD has $100/share upside for us from where it is trading today and you get paid very nice quarterly dividends.
Dan Steffens
Energy Prospectus Group
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