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Magnolia Oil & Gas Corp (MGY) Soars 7.3%: Is Further Upside Left in the Stock?

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Magnolia Oil & Gas Corp (MGY) shares soared 7.3% in the last trading session to close at $17.84. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 10.1% gain over the past four weeks.

Magnolia Oil & Gas stock rose for the third time in four days, driven by optimism over rising commodity prices spurred by widespread COVID-19 vaccine rollouts, the ongoing government stimulus and an improving demand picture. The recovery in crude prices to over $75 a barrel and natural gas surging to seven-year highs has lifted the energy space and contributed to the strength in Magnolia Oil & Gas, an upstream operator in South Texas. Besides, an improving macro environment prompted Truist Securities analyst Neal Dingmann to raise the price target on the company.

This company is expected to post quarterly earnings of $0.58 per share in its upcoming report, which represents a year-over-year change of +866.7%. Revenues are expected to be $271.04 million, up 123.9% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For Magnolia Oil & Gas Corp, the consensus EPS estimate for the quarter has been revised 1.2% lower over the last 30 days to the current level. And a negative trend in earnings estimate revisions doesn't usually translate into price appreciation. So, make sure to keep an eye on MGY going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 1 (Strong Buy). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

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