Marathon Oil (MRO) – Get a report Morgan Stanley analysts improved the equally weighted stock relative to the underweight, citing factors such as stronger free cash flow and an attractive valuation.
The Houston-based company is also expected to beat consensus estimates during the quarter, the investment firm said.
“Rising inflation, interest rates and GDP are all positive winds for the energy sector, where valuations still remain cheap relative to other cyclical stocks,” wrote Devin McDermott, analyst. at Morgan Stanley.
In addition, greater free cash flow and “a rapidly improving balance sheet allow the company to increase cash yields in the coming quarters.”
Marathon Oil shares at last check were trading 0.7% at $ 12.81. Shares hit a 52-week high at $ 14.16 on June 3.
Last month, Marathon reported a GAAP net loss of $ 242 million, or 37 cents per share, compared with a net loss of $ 9.2 billion, or $ 14.25 per share, during the period l ‘last year. The adjusted net loss for the last quarter was 20 cents per share.
Revenue increased 9% to $ 22.88 billion from $ 20.99 billion.
A survey of analysts by FactSet produced consensus estimates of a GAAP loss of 71 cents per share, or an adjusted loss of 72 cents per share, on revenue of $ 19.35 billion .
“With the rollout of COVID-19 vaccination, we are starting to see an increase in global mobility and demand for transportation fuels,” CEO Michael Hennigan said in a statement.
“For the first time since the start of the pandemic, our refining and marketing business generated positive adjusted earnings before interest, taxes, depreciation and amortization.