I have updated my forecast/valuation model for SM Energy. They reported solid Q1 results and raised their 2024 production guidance. The balance sheet is in good shape and they continue to report strong well results in the Permian Basin and South Texas. Based on my forecast, free cash flow should be over $500 million this year. SM pays a small dividend ($0.18/Qtr) and they are funding a stock buyback. They have no near-term debt problems and over $1 billion of liquidity.
My valuation increases by $3 to $68/share. < Based on just 4.5 X annualize operating CFPS, which is a low multiple for a company of this size and quality.
SM closed at $50.15 on Friday.
TipRanks 5-3-2024: "Siebert Williams Shank & Co analyst Gabriele Sorbara (5-Star Rated by TipRanks) reiterated a Buy rating on SM Energy today and set a price target of $76.00."
According to TipRanks.com, Sorbara is ranked #408 out of 8802 analysts. He is the only analyst that has updated his price target since SM announced Q1 results on May 2. I expect the Wall Street Gang to increase more price targets this week.
In a report issued on April 22, KeyBanc also maintained a Buy rating on the stock with a $65.00 price target.
SM Energy (SM) Valuation Update - May 5
SM Energy (SM) Valuation Update - May 5
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group