Laredo Petroleum (LPI) Update - Jan 5

[dan_s]

At the time of this post LPI was trading at $74.65. First Call's price target is $90.40.
TipRanks: "On 12-6-2021 Raymond James analyst John Freeman maintained a Buy rating on Laredo Petroleum today and set a price target of $85.00."
> According to TipRanks.com, Freeman is a 5-star analyst with an average return of 17.2% and a 49.9% success rate. Freeman covers the Utilities sector, focusing on stocks such as National Fuel Gas Company, Continental Resources, and Occidental Petroleum.
> In the last 3 months, 5 ranked analysts set 12-month price targets for LPI. The average price target among the analysts is $79.80.

I have updated my forecast/valuation model for LPI and it will be posted to the EPG website this afternoon.
My valuation increases by $10 to $112.00/share.
> My valuation is just 2.5X annualized operating cash flow for the three years 2021 to 2023. Note that my valuation multiple is quite low for a company of this quality. They have some work to do on the balance sheet, but near-term liquidity is not a problem and the Company should generate a lot of free cash flow from operations in 2022.
> Based on Laredo's guidance, the company is expected to report a significant increase in production from Q3 (76,703A Boepd) to Q4 (82,000E Boepd).
> My 2022 and 2023 forecasts are based on the assumption that WTI will average $80/bbl for both years. Adjusting for regional differentials and estimated cash settlements on Laredo's hedges, I am forecasting that Laredo's realized oil prices will be $66.75/bbl in 2022 and $75.00/bbl in 2023. At the time of their Q3 earnings release 67% of their oil was hedged for 2022 and none was hedged for 2023.
> LPI is an extremely HIGH BETA stock because it has less than 16.2 million shares outstanding.