Atlantic Equities - Hess (HES) A robust performance in Q2

Report

Atlantic Equities

Barry MacCarthy

A robust performance in Q2

Q218 cash earnings beat consensus by 16% and FY18 guidance is maintained, despite divesting ~3% of FY18 volumes, and arguably looks conservative, if new Bakken wells perform well. However the stock's 37% YTD gains leaves it on elevated 12m forward multiples versus the sector, before falling to an in-line multiple in 2020, when first production is expected from Guyana. As such current valuation is fair. On a raised crude price deck (e.g. WTI $70/bl in 2020) we increase our price target to $64 (from $60) and retain our Neutral rating. High oil gearing remains an upside risk if crude prices continue to firm.

26/07/2018 5 EN

Underlying

Hess

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Provider

Atlantic Equities

Formed in 2003 by an established team from Cazenove, one of the most respected investment banks in the UK, Atlantic Equities conducts and publishes fundamental, bottom up research on mid and large cap US companies.

Atlantic provide order execution through a wide range of DMA products and algorithmic trading suites.

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Analysts

Barry MacCarthy

Other Reports on these Companies

Atlantic Equities

Energy: Tighter supply supports further crude recovery

A recent rebound in crude prices, which has seen WTI recover from $65/bl in mid-August to $70/bl, is supported by market developments. A surge in US/North Sea/OPEC supply is being digested and a slow down in Chinese imports has stabilized and should reverse. On the supply-side, Permian bottlenecks are becoming more acute, Iranian exports are dropping ahead of US sanctions, and Saudi Arabia is unwilling to oversupply markets. Those factors more than offset an underwhelming US driving season and tepid Q2 demand growth in Europe. MRO and EOG are our preferred Overweight names in this environment.

September 3, 2018 September 3, 2018 12 EN

Atlantic Equities

Strong output drives good first quarter

HES's initial FY18 output guidance issued in January, of +3% YoY growth, was seen as underwhelming at the time but the Q1 performance indicates management were conservative in their view. Q1 output (ex-Libya) of 233kboed beat guidance of 220-225kboed and, while the FY18 outlook is maintained, investor confidence that guidance can be met/exceeded should be raised. On our raised crude price deck (e.g. WTI $65/bl in 2020) we raise our price target to $60 and retain our Neutral rating. High oil gearing is an upside risk if crude prices continue to firm.

April 26, 2018 April 26, 2018 4 EN

Model update

This report contains forecasts updated for reported Q218 results. Neither our financial nor PSU estimates are materially changed and we remain Overweight with a 12m PT of $365.

October 1, 2018 October 1, 2018 5 EN

Kunaal Malde ... (+2)

Kunaal Malde
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V/MA: strong core, adjacencies more competitive

V/MA remain core long term holdings with secular cash to card tailwinds driving strong growth long term, supported by developments such as contactless. Valuation remains reasonable, although newer growth areas such as B2B face greater competition. We remain Overweight V/MA, raise our price targets to $173 and $250 respectively and currently favour V which trades on a PE of 28x, three turns lower than MA.

October 1, 2018 October 1, 2018 17 EN

John Heagerty ... (+3)

John Heagerty
Nadja Heini
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Banks: Trading update and 3Q18 preview

Market volatility has moderated significantly since the beginning of the year, ceasing to be a tailwind for the banks' trading revenues in 3Q18. Despite the strong IB pipelines (announced M&A is up 40% YTD), fee pools have been affected by timing issues and are down 15-20% across the industry for the current quarter. Medium term, the outlook remains positive thanks to improving GDP growth, benign credit conditions, rising interest rates and a deregulatory focus. We have lowered our 3Q18 EPS estimates by 3% on average. Our longer term forecasts decline only modestly by 1%. C remains our t...

September 27, 2018 September 27, 2018 14 EN

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A robust performance in Q2

Energy: Tighter supply supports further crude recovery

Strong output drives good first quarter

Model update

V/MA: strong core, adjacencies more competitive

Banks: Trading update and 3Q18 preview

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