PDC Energy (PDCE) Update - Jan 17

[dan_s]

TipRanks: "In the last 3 months, 6 ranked analysts set 12-month price targets for PDCE. The average price target among the analysts is $72.00. On 1/14/2022 Truist analyst Neal Dingmann raised the firm's price target on PDC Energy to $75 from $72 and keeps a Buy rating on the shares as part of a broader research note updating his Exploration & Production group model. The analyst notes that more oil-weighted E&P names warrant higher price targets as he increases his 2022 oil price deck by about 10% and his 2023 deck by about 8%. Dingmann adds however, that while the oil strip remains highly backwardated, the current natural gas strip has "largely flattened out", driving price target declines across most of his covered natural gas names."

PDCE closed at $56.48 on January 14th, up 15.79% YTD.
I have updated my forecast/valuation model for PDCE, raising my valuation by $3 to $93/share.

Operating cash flow per share should go from $15 in 2021 to $21 in 2022.

PDCE is primarily a DJ Basin company with a second core area in the Permian Basin. It is ontrack to generate over $900 million of free cash flow from operations in 2021 and FCF should go over $1.2 Billion in 2022. This "Free Cash Flow Machine" pays a small dividend and has an active share buyback program. I do expect their dividends to increase in 2022 and 2023.