SM Energy Upgrade - Dec 22
Posted: Tue Dec 22, 2020 10:38 am
SM Energy Company (SM, $5.57, Buy; Target $8.00) - Raising Target Price - Michael S. Scialla, energy sector analyst at Stifel
December 22, 2020
"We are raising our target price to $8 from $5 based on a slightly more aggressive development pace, an improving financial outlook and emerging Austin Chalk potential. While the early stage play has yet to be fully delineated, the Chalk appears to be competitive with SM's Howard County assets, where its wells rank near the high end of our Midland Basin peer group. In addition, a strong hedge position and a deep inventory of DUCs should insulate the 4Q20 and 2021 capital plans from a potential oil price decline."
December 11, 2020 from TipRanks: "Susquehanna analyst Biju Perincheril raised the price target on SM Energy (NYSE: SM) to $7.00 (from $2.50) while maintaining a Neutral rating."
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My valuation is $8.00
SM's production is expected to be down from Q3 to Q4, but with 90% of oil hedged at $55/bbl and gas & NGL prices up operating cash flow should be good.
SM can and must generate steady FCF from operations.
Production mix is good: 48% crude oil, 37% natural gas & 15% NGLs
December 22, 2020
"We are raising our target price to $8 from $5 based on a slightly more aggressive development pace, an improving financial outlook and emerging Austin Chalk potential. While the early stage play has yet to be fully delineated, the Chalk appears to be competitive with SM's Howard County assets, where its wells rank near the high end of our Midland Basin peer group. In addition, a strong hedge position and a deep inventory of DUCs should insulate the 4Q20 and 2021 capital plans from a potential oil price decline."
December 11, 2020 from TipRanks: "Susquehanna analyst Biju Perincheril raised the price target on SM Energy (NYSE: SM) to $7.00 (from $2.50) while maintaining a Neutral rating."
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My valuation is $8.00
SM's production is expected to be down from Q3 to Q4, but with 90% of oil hedged at $55/bbl and gas & NGL prices up operating cash flow should be good.
SM can and must generate steady FCF from operations.
Production mix is good: 48% crude oil, 37% natural gas & 15% NGLs