EU and US could reach trade deal this weekend - Reuters
On Thursday, Mizuho (NYSE:MFG) Securities updated its outlook on Comstock Resources (NYSE:NYSE:CRK), increasing the stock's price target to $22.00 from the previous $18.00, while maintaining a Neutral rating. The stock, currently trading at $21.52 and near its 52-week high, has shown remarkable momentum with a 153.96% return over the past year according to InvestingPro data.
The adjustment comes ahead of the company's fourth-quarter earnings report, where a significant update on the Western Haynesville asset is anticipated.
Comstock Resources has concluded its leasing activities in the Western Haynesville play, and the recent completion of five wells in December has demonstrated strong economic potential due to reduced drilling and completion (D&C) costs.
As a result, Mizuho has doubled the number of locations factored into the net asset value (NAV) estimate to approximately 600, up from 300. This change reflects a more optimistic outlook on the asset's development prospects, although the company's management has suggested the existence of around 3,000 potential drilling locations.
The analyst expects that the improving natural gas prices will align with Comstock Resources' production volume, which is set to increase as the company plans to add two drilling rigs in the first half of 2025. This strategic move was part of the company's previously announced plans.
Furthermore, the company's trailing twelve months (TTM) net debt to earnings before interest, taxes, depreciation, and amortization (EBITDA) ratio is projected to remain below the revised covenant levels that were announced in the third quarter of 2024.
With current EBITDA at $662.03 million and a concerning current ratio of 0.6, investors seeking detailed financial health analysis can access the full Pro Research Report available on InvestingPro, which covers over 1,400 US stocks. The increase in the price target to $22 reflects the additional value attributed to the Western Haynesville asset, while the analyst reiterated their Neutral rating on the stock. This outlook indicates a cautious optimism about Comstock Resources' financial and operational progress, particularly in the context of its Western Haynesville development.
In other recent news, Comstock Resources has been upgraded to Neutral by Mizuho Securities, following strategic financial moves that could bolster the company's position in the energy market. The firm's upgrade was influenced by Comstock's covenant relief from lenders, successful drilling in the Western Haynesville area, and cost efficiencies. Furthermore, the company's assets are located near two significant growth areas for natural gas demand, which could lead to higher realization rates.
In a separate development, Crawford & Company has selected KPMG LLP as its new auditor for the fiscal year ending December 31, 2025. The decision came after a competitive selection process, with KPMG currently undergoing standard evaluation procedures. Ernst & Young LLP will continue to serve as the independent auditor for the fiscal year ending December 31, 2024.
On the earnings front, Comstock Resources reported its Q3 2024 results, highlighting a modest production increase and significant operational improvements. The company reported total oil and gas sales of $305 million, with an average realized price of $1.90 per Mcf. Despite a challenging pricing environment, the company remains optimistic about the future.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.