Can Marathon Oil Stock Run 44% to $37 a Share?


MRO stock - Can Marathon Oil Stock Run 44% to $37 a Share?

Source: Jonathan Weiss/

Oil stocks have been a huge focus among investors as oil and energy prices continue to rally. Whether that’s the large cap oil companies like Exxon Mobil (NYSE:XOM) or some of the mid-cap companies like Marathon Oil (NYSE:MRO), the group has been enjoying the boom in energy prices. As it pertains to MRO stock, shares are up about 55% so far on the year. 

That’s incredible performance and not just because that’s multiple years worth of gains condensed into roughly one quarter. It also comes at a time where the overall stock market continues to struggle. While the S&P 500 and Nasdaq are up off the lows of the year, volatility remains elevated. However, Marathon Oil continues to chug higher. 

The average analyst price target sits at $29-and-change, implying about 14% upside from current levels. For most investors, an additional 14% gain on top of what has already been a monstrous year would be the cherry on top. 

More specifically though, Piper Sandler analyst Mark Lear assigned a $37 price target on MRO stock on April 7. That obviously goes alongside his buy rating on the stock. If Marathon were to get there, it would represents more than 40% upside from current levels. 

How can it get there? Well it helps that oil and gas prices continue to climb. If that remains the case, the whole sector is likely heading higher too. For Marathon Oil specifically, analysts expect earnings to more than double this year. 

If those estimates come to fruition — and it is possible they are conservative — we’re talking about a stock that trades at just 7.5 times this year’s earnings. Admittedly, analysts expect a dip in sales and earnings in 2023. However, that not only still leaves Marathon at a low valuation, but open to higher estimates if energy prices remain elevated. 

Is MRO a slam dunk? Not necessarily, because the oil market has been volatile and that can lead to volatility in energy stocks. However, it’s one of the few groups that has strong momentum right now and with a dirt-cheap valuation, it’s not hard to see how Marathon can continue to push higher.

On the date of publication, Bret Kenwell did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell.

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