Coterra Energy (CTRA) Update - Dec 27

[dan_s]

CTRA is trading at $19.86 at the time of this post. First Call's price target is $27.77 and the average of all the price targets submitted to TipRanks since the merger of Cimarex into Cabot created Conterra on October 1st is $28.18.

I have lowered by realized natural gas prices forecasts for Conterra to $3.70/mcf in Q4 2021 and $3.40/mcf for 2022.
My current stock price valuation declines by $2.50 to $29.50/share.

There is upside to my valuation because I am just using a valuation multiple of 5X to value the common stock. That is very low for a company of this quality that is going to pay very large dividends.
"On November 3, 2021, Coterra's board approved the previously announced 14 percent increase to its annual base common stock dividend to $0.50 per share and an acceleration of its first variable dividend by one quarter. The approved base plus variable quarterly dividend equals $0.30 per share ($0.125 base, $0.175 variable), based on combined legacy Cabot and Cimarex free cash flow for third-quarter 2021, and will be paid on November 24, 2021 to holders of record on November 15, 2021."

I expect Coterra's fixed + variable dividends to go up in 2022, but even if they stay at $0.30/quarter the annual yield is over 6%. That is good for a company with a super strong balance sheet and lots of running room. If Coterra's guidance for 2022 confirms my forecast model assumptions, my valuation will go to $35/share.

On December 17th: Siebert Williams Shank & Co analyst Gabriele Sorbara maintained a Buy rating on Coterra Energy on Friday, setting a price target of $32, which is approximately 59.36% above the present share price of $20.08.

The current consensus among 18 TipRanks analysts is for a Moderate Buy rating of shares in Coterra Energy, with an average price target of $28.18. The analysts price targets range from a high of $33 to a low of $25.

In its latest earnings report, released on 09/30/2021, the company (Cabot Oil & Gas) reported a quarterly revenue of $440.4 million and a net profit of $95.66 million. The company's market cap is $16.34 billion.

According to TipRanks.com, Siebert Williams Shank & Co analyst Gabriele Sorbara is currently ranked with 3 stars on a 0-5 stars ranking scale, with an average return of 1.5% and a 37.37% success rate.

Other analysts' price targets in December:
> JP Morgan on 12/7/2021 = $28.00
> Raymond James on 12/2/2021 = $31.00
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I've been getting Gabriele's forecasts for many years and his models are always very close to mine.