Investing.com - Raymond James downgraded Vital Energy (NYSE: VTLE ) from Outperform to Underperform on Tuesday as the firm reassessed the company’s position amid changing oil market fundamentals.

The downgrade comes despite VTLE being the best performing stock in Raymond James’ coverage universe over the past month, with gains of approximately 25%. The firm cited expectations that oil prices could settle around $60 per barrel for an extended period as geopolitical risk premiums unwind.

Raymond James highlighted Vital Energy’s higher leverage ratio of approximately 1.9x compared to the small and mid-cap average of 1.2x, making it the highest beta name in their coverage. The firm also noted VTLE’s lower inventory life in the Permian Basin as factors in the downgrade decision.

For the second quarter of 2025, Vital Energy has guided oil production at 63 MBbl/d at the midpoint, roughly in line with Street expectations, while its capital expenditure guidance of $230 million at the midpoint is 13% above Street estimates. The company exited the first quarter with $735 million outstanding on its recently reduced $1.4 billion revolving credit facility.

Vital Energy has hedged approximately 90% of its expected remaining 2025 oil production at around $71 per barrel and about 79% of its expected remaining 2025 natural gas production at approximately $2.30 per MMBtu, providing some downside protection despite the challenging outlook.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.