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On Tuesday, Stephens analyst Mike Scialla revised the price target for SM Energy (NYSE:SM), a company engaged in the exploration, development, and production of crude oil, natural gas, and natural gas liquids. The new price target is set at $55.00, decreased from the previous $62.00, while the Overweight rating remains unchanged. According to InvestingPro data, the company currently trades at an attractive P/E ratio of 3.25x and maintains a healthy gross profit margin of 81%.
The adjustment in SM Energy’s price target comes amid Scialla’s estimates that the company’s first-quarter cash flow per share (CFPS), production, and capital expenditures (capex) are slightly off from consensus expectations. According to Scialla, the CFPS and production are both 1% below consensus, while capex is 2% higher. InvestingPro analysis reveals the company is currently operating with significant debt burden and rapidly burning through cash, with short-term obligations exceeding liquid assets.
Scialla anticipates that the upcoming conference call will likely concentrate on various key topics. These include the integration of the recent XCL/Altamont acquisitions, the status of the company’s balance sheet, and detailed well data from several of SM Energy’s projects such as Klondike, Sweetie Peck, the western extension Austin Chalk farmout, and the Uinta Basin.
The rationale behind the lowering of the net asset value (NAV) per share and the target price to $55 is attributed to the recent NYMEX strip prices, which have influenced the valuation. Despite the reduced price target, the Overweight rating suggests that Stephens continues to see the stock as a favorable investment relative to the sector.
In other recent news, SM Energy reported its first-quarter 2025 production is projected to be 195 thousand barrels of oil equivalent per day, aligning with company guidance. Capital expenditures for the first quarter are estimated to be approximately $428 million, consistent with the company’s latest guidance. For the full year 2025, production is expected to be around 208 MBoe/d, with capital expenditures close to $1.3 billion. In analyst updates, Mizuho (NYSE:MFG) Securities adjusted its price target for SM Energy from $55.00 to $48.00, while maintaining an Outperform rating. Similarly, Raymond (NSE:RYMD) James reduced its price target from $59.00 to $40.00 but also retained an Outperform rating. Both firms cited various factors, including market trends and company performance, as reasons for the adjustments. Additionally, SM Energy announced the upcoming retirement of Dr. Stephen R. Brand from its Board of Directors, effective at the conclusion of the annual stockholders meeting in May 2025. The company confirmed that Dr. Brand’s departure is not due to disagreements with company policies or practices.
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