With a market cap of $42.7 billion, Hess Corporation (HES) specializes in exploration, production, and midstream services for crude oil, natural gas liquids, and natural gas. Based in New York, the company conducts major operations across the U.S., Guyana, and Southeast Asia.
Shares of the oil and gas producer have underperformed the broader market over the past 52 weeks. HES has dropped 5.2% over this time frame, while the broader S&P 500 Index ($SPX) has rallied 31.1%. In 2024, shares of HES are down 3.8%, compared to SPX’s 19.8% gain on a YTD basis.
Zooming in further, HES’ underperformance becomes more evident when compared to the Energy Select Sector SPDR Fund’s (XLE) 3.7% gain over the past 52 weeks and 7.2% return on a YTD basis.
Despite Hess Corporation's better-than-expected Q3 adjusted EPS of $2.14 and revenue of $3.2 billion, shares fell marginally on Oct. 30 due to a decline in crude oil prices, which dropped to $77.06 per barrel from $84.07 a year ago, raising concerns about future profitability. Furthermore, natural gas production decreased to 538 Mcf/d, missing estimates and indicating potential operational challenges. Lastly, the increase in full-year capital expenditure guidance from $4.2 billion to $4.9 billion led investors to worry about rising costs impacting cash flow and overall financial stability.
For the current fiscal year, ending in December, analysts expect HES’ EPS to grow 93.3% year-over-year to $9.76. The company’s earnings surprise history is promising. It beat the consensus estimates in the last four quarters.
Among the 14 analysts covering the stock, the consensus rating is a “Moderate Buy.” That’s based on five “Strong Buy” ratings and nine “Holds.”
This configuration is slightly less bullish than three months ago, with six “Strong Buy” ratings on the stock.
On Oct. 31, CFRA downgraded Hess Corporation's stock price target to $145 while maintaining a “Hold” rating, citing heightened regulatory risks and revising its 2024 and 2025 EPS estimates downward, despite the company reporting a stronger-than-expected Q3 EPS and significant production growth driven by its operations in Guyana.
As of writing, HES is trading below the mean price target of $161. The Street-high price target of $194, implies a potential upside of 39.9% from the current price.
On the date of publication, Sohini Mondal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
