Vital Energy (VTLE) Price Targets Updated - Apr 5

[dan_s]

VTLE closed at $56.78 on April 5, up 24.82% YTD.
Vital is a pure play on the Permian Basin, which is just beginning to get the attention from the Wall Street Gang that it deserves. Vital's production increased 17.1% YOY in 2023 and the midpoint of their 2024 guidance (119,000 Boepd with 57,000 BOPD) will be 23.3% YOY production growth in 2024.

On Friday, April 5 two energy sector analysts submitted updated forecasts and price targets to TipRanks:
> Neal Dingmann at Truist Financial price target is now $77.00 and he rates VTLE a BUY
> Derrick Whitfield at Stifel Nicolaus also rates VTLE a BUY with a price target of $70.00

I have updated my forecast model for Vital Energy based on my current oil & gas price deck. My valuation is lowered by $2 to $102. The reason for my lower valuation is just because I increased the differential on the Company's realized natural gas price from $1.75 to $2.00 for 2024 and 2025. Realized natural gas prices in the Permian Basin remain extremely low because all of the pipelines are full.

Here are the current consensus forecasts from TipRanks (average of 9 analysts that cover VTLE)
> 2024: $9.20 Net Income per share and $28.98 operating cash flow per share. < Compares to my forecasts of $6.51EPS and $25.97CFPS
> 2025: $10.53 Net Income per share and $29.89 operating cash flow per share. < Compares to my forecast of $11.79EPS and $30.53CFPS

Vital's fully diluted share count is only 37 million, which is very low for a company of this size. I'd like to see them do a stock split of 3 for 1.
It would also be good if they could pay for some bolt-on acquisitions with stock.
Daily trading volume of 760,000 shares is high for a company with such a low number of shares.

Vital has closed 7 strategic transactions over the last 12 month. Six acquisitions and one sale to Granite Resources (GRNT) of non-operated working interests. They've also restructured their debt recently at lower interest rates. Vital is in good financial shape with plenty of quality Running Room in the Permian Basin.