SM Energy (SM) Price Target Update - June 30

[dan_s]

Just saw this on TipRanks:

On June 28th Gabriele Sorbara, an analyst from Siebert Williams Shank & Co, maintained his Buy rating on SM Energy. The associated price target remains the same with $76.00.

Gabriele Sorbara has given his Buy rating due to a combination of factors including SM Energy’s impressive performance and the potential acquisition that he views positively. The strong results delivered by the company signal robust operational capabilities, which bolster investor confidence in its ability to sustain and grow its business. Moreover, the potential acquisition is seen as a strategic move that could expand the company’s inventory depth, addressing concerns that have been prevalent among stakeholders.

Additionally, Sorbara believes that SM Energy’s valuation is attractive, suggesting that the stock is currently undervalued. This presents an opportunity for investors to buy into a company with solid fundamentals at a price that may offer considerable upside potential. His outlook on the company’s financial health and strategic positioning in the market contributes to the conviction that SM Energy is a sound investment choice, meriting a Buy rating.

In the last 3 months, 12 ranked analysts have submitted updated price targets for SM to TipRanks. The average price target among the analysts is $58.58.

My current valuation is $72 per share, which is just 4.25 X annualized operating cash flow per share for 2023-2025. < A low valuation multiple for a company of this quality.
My updated forecast for 2025 is based on the assumption that the Uinta Basin Acquisition announced last week will close by the end of Q3 2024.
> SM's production should be over 205,000 Boepd in 2025 with a mix of approximately 50% crude oil, 34% natural gas and 16% NGLs.
> In 2025: If WTI averages $80/bbl and HH natural gas averages $3.50/mcf, SM Energy should generate over $1.1 Billion of Adjusted Net Income ($10.17/share) and over $2.4 Billion of Adjusted Operating Cash Flow ($22.39/share) next year. < If so, a $100 price target should be justified a year from now.
> TipRanks' consensus forecasts for 2025 are $8.63 EPS and $18.77 operating CFPS.

Northern Oil & Gas (NOG) has teamed up with SM on the Unita Basin Acquisition, but none of the analysts covering have submitted new price targets for NOG to TipRanks. TipRanks consensus price target of NOG sits at $49.77 today.