Callon Petroleum (CPE) Upgrade - Feb 9

[dan_s]

TipRanks: "On 3/8/2022 Truist analyst Neal Dingmann upgraded Callon Petroleum to Buy from Hold with a price target of $100, up from $64."


Note from David Snow at Energy Equities 3-3-2022:
"CPE has increased its shares 58% over the period ’20-‘22E, while production has been relatively flat. But it has gotten its 4Q’21 annualized Debt/Ebitda down to 2.0x, from over 4x two years ago with the CRZO Eagle Ford acquisition, and now appears poised to embark on a period of sustained per-share production and cash flow growth. The stock has broken out from a four-month consolidation along with the group, and at 5x cash flow has a 2.25x upside to $132, with first stop technically $70 (18%). Strong Buy."
"So, the payoff from past acquisitions is now at hand. CPE’s first priority with FCF is paying down more debt, to 1.5x Ebitda by 12/’22 and eventually 1.0x, but will consider returns to shareholders later this year. Perhaps it will actually shrink shares, for a change, and give a dividend, with the embarrassment of wealth accompanying $100+ oil prices. Strong Buy."

Using my new commodity price deck, my valuation of CPE increases by $11 to $106 per share.