Callon Petroleum (CPE) Price Target - June 30

[dan_s]

TipRanks: "On 6-30-2023 Callon Petroleum's price target raised to $59 from $54 at Mizuho by Nitin Kumar CFA". Nitin is a 5-Star analyst per TipRanks

TipRanks: "In the last 3 months, 9 ranked analysts set 12-month price targets for CPE. The average price target among the analysts is $51.77." < The highest price target is from Neal Dingmann, a 5-star analyst at Truist Financial that rates CPE a BUY with a $71 price target.

My current valuation for CPE is $77, which is just 3.75 X annualized operating cash flow per share. CPE's operating cash flow was $25.61 per share in 2022 and my current forecast is $19.55 CFPS in 2023. TipRanks' forecast for 2023 is $20.12 CFPS.

Callon expects to close two transactions in July that will significantly improve their balance sheet. When the deal closes, I expect more of the Wall Street Gang to take a hard look at CPE.

There is nothing that I can see which justifies CPE trading at less than 2X operating CFPS.

The last time that I looked there was a large short position in CPE. To me that is bullish because if their actual results continue to meet or exceed my expectations all of those shorts will be forced to cover.

[dan_s]

"2023 Sector Thesis. Although the sector has underperformed the market YTD,
we see underappreciated value and free cash generation, with a more constructive
outlook for both oil and gas in 2H23. Our top picks are FANG, CTRA and
DVN. Buy-rated XOM, EQT, CHK, CRC, and VLO also screen well on our
Energy Investment Framework rank ordering" - Mizuho Securities 6-29-2023