On Thursday, Marathon Oil Corporation (NYSE:MRO) received an upgrade from a Hold to a Buy rating by Argus. The firm also set a price target for the company's shares at $31.00, suggesting a potential total return of approximately 25%, dividend included.
The decision to upgrade the rating is based on the company's attractive valuation metrics, which are favorable both on an absolute basis and in comparison to its peers in the exploration and production (E&P) sector. The firm's analysis points to Marathon Oil's strong financial foundation, underscored by its low debt levels and robust free cash flow yields.
The company's shareholder-oriented strategies, which include consistent dividend increases and share repurchase programs, were also cited as key factors in the rating upgrade. The firm believes that Marathon Oil's multi-basin operational approach, spanning the Bakken, Eagle Ford (NYSE:F), and Permian basins, is well-suited for the current energy landscape.
Argus anticipates that Marathon Oil will maintain its focus on generating free cash flow and growing earnings while continuing to provide increasing returns to its shareholders. This outlook is supported by the company's three-year history of strong operational performance and growth in shareholder value.
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