Citi Raises Anadarko Price Target By $3 To $65 Following Q1 Beat

Citi has raised the price target on the shares of Anadarko Petroleum Corporation (NYSE: APC) after the company's cost cutting efforts drove better-than-expected quarterly results.

Analyst Robert Morris increased his price target on the stock by $3 to $65, implying an upside of 25 percent from Monday's close.

Anadarko Results And Guidance

Anadarko reported recurring first-quarter EPS/CFPS of ($1.12)/$0.95 versus analyst's estimate of $(1.16)/$0.75. Sales volumes of about 827 MBOE/d were slightly above Morris' 824 MBOE/d forecast and the mid-point of 813–835 MBOE/d guidance, but well above consensus of 811 MBOE/d.

Related Link: Deutsche Bank Sees Operational Momentum Building In Anadarko

The company plans for full-year capital spending to be at $2.6 billion–$2.8 billion, indicating that it will drill more wells this year than the analyst has modeled.

Citi's Forecast And Justification

As a result, Morris raised his full-year production forecast to about 784 BOE/d, which came in above Anadarko's unchanged 770–781 MBOE/d guidance range. Earlier, the analyst was expecting production of 781 MBOE/d.

The analyst also raised his 2016 EPS/CFPS estimates to ($3.96)/$3.96 from ($4.17)/$3.60. Street expects EPS of ($3.57) for the full year.

Meanwhile, Morris maintains his Buy rating on Anadarko and noted that the company's core DJ Basin holdings, particularly with its Land Grant acreage, are among the most economic North America oil resource plays.

"Despite not ranking in the top-quartile on our per share debt-adjusted growth metrics, it does rank in the top-quartile on valuation and the ability to grow production within projected cash flow in 2016," Morris added.

At time of writing, shares of Anadarko were down 4.25 percent to $49.74.