Vital Energy (VTLE) Valuation Update - June 22

[dan_s]

At the time of this post VTLE was trading for $42.21.

First Call's price target is $72.88

TipRanks: "In the last 3 months, 6 ranked analysts set 12-month price targets for VTLE. The average price target among the analysts is $68.50."
What's weird is that the two most recent updates are the top and the bottom of the price target range.
> On 6/3/2023 Derrick Whitfield at Stifel Nicolaus rated it a BUY with a price target of $112.00
> On 6/13/2023 Mark Lear at Piper Sandler rated it a HOLD with a price target $45.00

Average of the six forecasts submitted to TipRanks for 2023:
> Revenues of $1.47 billion
> Earnings per share of $20.04
> Operating cash flow per share of $45.31 < I have NEVER seen a profitable upstream company trade for less than 1X operating CFPS.

My forecast for 2023:
> Revenues of $1.506 billion
> Earnings per share of $22.46
> Operating cash flow per share of $42.43
My current stock valuation of $114.00 is just 2.5 X annualized operating cash flow.

Vital closed the Driftwood Acquisition on April 3rd, adding ~5,400 Boepd of production (~63% oil)
Vital expects to close the Forge Energy Asset Acquisition within two weeks, adding ~9,500 Boepd of production (~65% oil)

The only negative that I could see coming into this year was that Vital was running out of high-quality drilling locations. The two acquisitions above solve that problem. Vital's production should be up ~5,500 Boepd from Q1 to Q2 to ~86,000 Boepd. They have a shot of getting close to 100,000 Boepd by year end.

Unless there is a major error in my forecast model, this stock is a grossly overvalued by the market.