Hess Corp stock target raised on acquisition terms By Investing.com

On Wednesday, Citi updated its financial model for Hess Corp . (NYSE:) following the company’s first-quarter results and second-quarter guidance. The firm raised its price target on Hess Corp. to $160 from the previous $145, while retaining a Neutral rating on the stock.

The adjustment in the price target is in anticipation of the pending acquisition of Hess Corp. by Chevron Corporation (NYSE:NYSE:). The terms of the acquisition state that Hess shareholders will receive 1.025 shares of Chevron for each share of Hess they own. This new stock price target reflects the equivalent value of the Chevron shares Hess shareholders are set to receive.

Citi’s revised target price is based on approximately 8.75 times the firm’s fiscal year 2024 Debt-Adjusted Cash Flow (DACF) estimate for Hess. This valuation comes as the market watches closely for the completion of Hess’s acquisition by Chevron, a deal that is expected to significantly reshape the company’s future.

The acquisition is a major development for Hess Corp., with shareholders looking toward the closure of the transaction to understand the full impact on their investments. The deal is also a significant event for Chevron, as it looks to expand its portfolio and operations through this strategic acquisition.

In the meantime, Hess Corp.’s stock will continue to be evaluated by investors as they consider the implications of the acquisition terms and the company’s financial performance. The raised price target from Citi indicates an expectation of value creation from the deal, as reflected in the exchange ratio agreed upon by Hess and Chevron.

In other recent news, Hess Corp shareholders have approved a proposed merger with Chevron, a significant move in the oil industry. The $53 billion deal, initially proposed last year, has faced delays due to an ongoing review by the U.S. Federal Trade Commission and an arbitration claim from Exxon Mobil (NYSE:).

Despite these challenges, the majority of Hess’ 308 million outstanding shares voted in favor of the merger. This development is seen as a victory for Hess CEO John Hess, who faced concerns from shareholders seeking additional compensation due to the extended timeline for finalizing the sale.

MKP Advisors’ analyst Mark Kelly commented that the transaction is set to proceed, potentially reshaping Hess’ future operations in the lucrative Guyana oil fields, pending the resolution of remaining regulatory and legal hurdles. Still, legal challenges aiming to postpone or prevent the deal have emerged, with Hess currently embroiled in three lawsuits alleging insufficient disclosures.

Despite these allegations, Hess has defended the adequacy of its disclosures and voluntarily enhanced its proxy statement to address the plaintiffs’ claims. These are recent developments in the ongoing saga of the Hess-Chevron merger.

InvestingPro Insights

In light of Citi’s recent price target adjustment for Hess Corp. (NYSE:HES), investors may find additional context through real-time data and analysis from InvestingPro. The company, which is in the midst of a significant acquisition by Chevron Corporation, is currently trading at a high revenue valuation multiple, with a Price / Book ratio of 4.61 as of Q1 2024. This indicates a premium valuation, which could be factored into the investment thesis.

InvestingPro Tips reveal that analysts have revised earnings upwards for the upcoming period, suggesting a positive outlook on the company’s financial health. Furthermore, Hess Corp. has maintained dividend payments for 38 consecutive years, demonstrating a commitment to returning value to shareholders—a consistency that may be appealing to investors looking for stable income.

From a performance standpoint, Hess Corp. has shown a strong return over the last five years. This, coupled with a moderate level of debt, paints a picture of a company that has managed its finances prudently while delivering growth.

Investors considering Hess Corp. in the context of the Chevron acquisition can utilize these insights to gauge the potential of their investment. For those seeking a more comprehensive analysis, InvestingPro offers additional tips on Hess Corp., which can be found at https://www.investing.com/pro/HES. Use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. There are currently 8 additional InvestingPro Tips available for Hess Corp., providing a deeper dive into the company’s financial health and market position.

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