BofA raises California Resources stock target on oil rally

BofA raises California Resources stock target on oil rally

On Thursday, BofA Securities updated its outlook on California Resources Corporation (NYSE: CRC ), raising the stock's price target to $57 from $55 while maintaining a Neutral rating. The adjustment reflects an anticipation of stronger financial performance due to the year-to-date surge in oil prices.

The firm anticipates California Resources to report first-quarter earnings and EBITDA (earnings before interest, taxes, depreciation, and amortization) of $0.98 per share and $157 million, respectively, surpassing the FactSet consensus estimates of $0.74 per share and $146 million. For the full year 2024, the firm's projection for EBITDA stands at $1.35 billion, which is also above the consensus of $1.14 billion.

The revised estimates incorporate a Brent crude oil price assumption of $88 per barrel for the remainder of the year, aligning with BofA Commodities' forecast. The analyst expects the company's financials to benefit from the oil price leverage, with the price target increase primarily driven by this factor.

Furthermore, the valuation takes into account the expected closure of the Area transaction early in the third quarter of 2024, as recently indicated by the company's communications. The anticipated completion of this transaction is factored into the firm's analysis and the resulting price target adjustment for California Resources.

InvestingPro Insights

According to InvestingPro's real-time data, California Resources Corporation (NYSE:CRC) presents an interesting profile for investors evaluating the company's recent performance and future potential. With a market capitalization of $3.7 billion and a P/E ratio of 6.65, the company appears to be trading at a low price relative to its near-term earnings growth, which is supported by a PEG ratio of 0.43. This suggests that the stock could be undervalued considering its growth prospects. Additionally, the company's gross profit margin stands strong at 54.82%, indicating efficient operations and potential for profitability.

InvestingPro Tips highlight that California Resources has a track record of raising its dividend for 3 consecutive years, with a current dividend yield of 2.3%. This consistent increase in dividends could be a sign of the company's commitment to returning value to shareholders. Moreover, analysts predict that the company will be profitable this year, which is reinforced by the fact that it has been profitable over the last twelve months. For investors seeking more in-depth analysis, there are 8 additional InvestingPro Tips available at that could further guide investment decisions.

For those considering an investment in California Resources, using the coupon code PRONEWS24 can secure an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro, offering access to exclusive insights and data to enhance investment strategies.

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