Crk downgrade

[Fraser921]

Comstock Resources (NYSE:CRK) +1.5% in Monday's trading on a strong day for energy stocks, while Goldman Sachs downgraded shares to Sell from Neutral with a $12 price target.

Goldman analyst Umang Choudhary noted Comstock (CRK) has attractive assets in the Haynesville which can support management's plan to create value by raising production, improving its balance sheet by generating free cash flow, and returning free cash flow to shareholders once leverage improves to below 1.5x, which is expected by the end of Q3.

However, Choudhary said his base case estimates call for "less unique FCF generation" for Comstock (CRK) relative to peers in 2022, '23 and '24 of 25%, 19% and 6% respectively vs. gas-focused E&Ps at 22%, 21% and 12%.

The analyst also said his Comstock (CRK) production estimates are 5% below median consensus estimates in 2023 and 14% above median consensus capex estimates.

[dan_s]

This makes no sense to me. CRK is going to generate a lot of fcf.

[uberCOAT]

Agree - this analyst is smoking too much weed or something stronger. They must be using very low natural gas pricing.

[dan_s]

My forecast (using much lower ngas prices than we have today), shows CRK generating operating cash flow per share of more than $7.50 this year and over $10.00 in 2023.

Maybe the GS analyst doesn't like the Dallas Cowboys.

CRK is close to a "Pure Dry Gas" play. The Haynesville Shale has very little liquids.

[uberCOAT]

Ha - yes you are probably correct.

[Fraser921]

Lol, He might be using the strip.