Noah Hungness, an analyst from Bank of America Securities, maintained the Sell rating on Vital Energy (VTLE – Research Report). The associated price target remains the same with $33.00.
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Noah Hungness has given his Sell rating due to a combination of factors, primarily focusing on Vital Energy’s financial outlook and operational challenges. The company reported a stronger-than-expected adjusted EBITDAX for the fourth quarter of 2024, driven by increased production. However, it fell short on free cash flow due to higher capital expenditures and additional spending on acquisitions, which resulted in a rise in absolute debt. This has led to a revised debt pay down target of $350 million by the end of 2025, down from the previous target of $400 million.
Furthermore, Vital Energy’s guidance for 2025 suggests challenges in production, with a reduced oil output forecast and removal of several drilling locations from its inventory. Although the company’s free cash flow sensitivity for 2025 exceeds expectations due to cost efficiencies, the production shortfall and increased debt raise concerns about the company’s ability to meet its financial targets promptly. These factors contribute to a cautious outlook, supporting the decision to maintain a Sell rating.
VTLE’s price has also changed slightly for the past six months – from $36.270 to $35.170, which is a -3.03% drop .