The average target price of HBR.L is 281 and suggests 52% upside potential. Usually, this means a BUY recommendation among investment firms, or a recommendation to increase one's position in this instrument in the next 12 months. The most optimistic analyst has a target price of 375.3. This translates into 103% upside potential in the best case. On the other hand, the most pessimistic analyst has a target price of 198.0. This suggests 7% upside potential. Even the most pessimistic analyst believes there will be stock growth. 

Harbour Energy plc, an independent oil and gas company, engages in the acquisition, exploration, development, and production of oil and gas reserves. It holds 124 license interests and 48 producing fields in various properties located in the United Kingdom, Norwegian Continental Shelves, Indonesia, Vietnam, and Mexico. The company is based in Edinburgh, the United Kingdom.

Energy

The company tries to pay dividends regularly but only sometimes does so. It has paid dividends in roughly half the past ten years. Dividend per share (DPS) has grown yearly, and there is a clear trend. In the past 12 months, the dividend yield has barely been above zero and was substantially below that of its peers. At the same time, the average five-year yield has been significantly higher and exceeded nearly all its peers. On average, the company pays dividends annually. 

HBR.L reported revenue of USD 6 226mn in the last 12 months, up 66% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. Market expects EPS to reach USD 0.42 in FY25.

The stock's performance has been mixed in the past six months, with growth following a decline. There is no clear price trend compared to its global peers from the same sector and industry (as shown above). It has underperformed this peer group by 25ppts over six months and grown 9ppts faster in the past month. This is largely true for peers from the same country and sector. With respect to the stock's valuation against its peers, its overall price performance is neutral.

The company has reported very strong EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 58.3% in the last 12 months, up from 53.7% in FY23. 

Historically, HBR.L has reported very poor net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled -1.7%, down from -1.5% in FY23. 

Harbour Energy plc reported a return on equity (RoE) of -2.8% in the last 12 months, up from -7.8% in FY23. The market consensus projects an RoE of -10.2% in FY24, again behind its peers. 

Another important profitability metric, return on assets (RoA), amounted to -0.5% in the last 12 months, an increase from -0.9% in FY23. The market analysts predict that RoA will be -1.6% in FY24, again weaker than its peers. 

In the last 12 months, the return on capital employed (RoCE) grew to -0.7%, below the peers. The consensus estimate for FY24 for RoCE is 34.3%, however, this time ahead of the peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 12.6 in the past several years. This ratio implies a excellent shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are minimal. In combination with stringent business standards, shareholder rights are very highly protected.

HBR.L has below average trading liquidity. The average private investor can sell his common position in the stock almost immediately. Liquidity is usually quite stable and remains extremely favourable on the days with the lowest activity. The trading volume mostly stays the same even under highly turbulent market conditions. The stock has a tiny market capitalisation, which usually makes its trading liquidity erratic and unpredictable. 

No other major risks have been identified.

The risk of default is moderate. We note robust profitability and solid cash flow generation, among the positive credit factors. Among the negative credit factors, we point to negligible return on capital, excessive margin volatility, poor working capital management, and an unfavourable capital structure.

In highly turbulent market conditions, HBR.L is moderately volatile. In other words, the stock will fall more than the index in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be moderate. 

In normal market circumstances, HBR.L is volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will move much wider than the index. The stock's losses on its worst days (less than 1-5% of the time) will range from moderate to substantial. 

Considering past and projected metrics, the stock is distinctly 'cheaper' than its peers. Specifically, the stock is 'cheap' on P/E, undervalued on EV/EBITDA, underpriced on P/FCF. 

£ 177.1

5

£ 177.1

5

Risk factor

Profitability factor

Risk / Profitability

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About

Risk factor

Profitability factor

£ 177.1

About

About

£ 177.1

5

£ 177.1

5

Risk factor

Profitability factor

Risk / Profitability

About

About

Risk factor

Profitability factor

£ 177.1

About

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