On Wednesday, Truist Securities adjusted its outlook on shares of Crescent Energy (NYSE:CRGY), increasing the stock's price target to $18.00, up from the previous $16.00, while maintaining a Buy rating. The revision follows Crescent Energy's announcement of a substantial $905 million acquisition.
According to InvestingPro data, the company, currently valued at $3.46 billion, is trading near its 52-week high with strong momentum, as evidenced by a 37% return over the past year. InvestingPro analysis indicates the stock is currently overvalued relative to its Fair Value.
Crescent Energy has acquired assets from Ridgemar Energy, a private entity, in the Central Eagle Ford (NYSE:F) area. This strategic move adds approximately 20 thousand barrels of oil equivalent per day (Mboepd) to Crescent's production and around 140 complementary drilling locations.
According to the analyst, this acquisition is significant as it expands Crescent's footprint in a prime U.S. play, acquiring the assets at less than three times EBITDA and around one times the price per daily production present value-10 (PD PV-10).
With current EBITDA of $1.47 billion and an EV/EBITDA multiple of 4.65x, InvestingPro data shows the company maintains efficient operational metrics. Eight analysts have recently revised their earnings expectations upward, suggesting growing confidence in the company's prospects.
The acquisition is seen as accretive, meaning it is expected to add value to Crescent Energy's operations. The assets were secured at an attractive valuation and are considered to complement the company's existing portfolio. The transaction is also anticipated to have a positive impact on Crescent's financials, leading to a slight improvement in the firm's 2025 estimates.
The analyst's commentary highlighted the favorable terms of the acquisition and the potential for Crescent Energy to continue its accretive growth strategy. By securing assets at a cost-effective multiple and a favorable price to production value, Crescent is positioned to enhance its operational efficiency and financial performance.
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The new price target of $18 reflects the analyst's confidence in the value that the Ridgemar Energy assets will bring to Crescent Energy. The company's strategic acquisition is expected to strengthen its position in the market and contribute to its long-term growth prospects.
In other recent news, Crescent Energy has made significant strides in its financial performance. The company achieved record production levels of 219,000 barrels of oil equivalent per day in the third quarter of 2024, surpassing previous expectations. This success is attributed to the effective integration of the SilverBow (NYSE:SBOW) acquisition.
Crescent Energy also revised its production outlook upward for the third consecutive quarter, with anticipated capital expenditures ranging from $425 million to $455 million for the remainder of the year. The company reported an adjusted EBITDA of approximately $430 million and a levered free cash flow of $160 million.
Crescent Energy has also announced a public offering of 18 million shares of its Class A common stock, managed by Wells Fargo (NYSE:WFC) Securities, LLC, KKR Capital Markets LLC, Raymond (NS:RYMD) James & Associates, Inc., and Evercore Group L.L.C.
The offering is intended to fund the upcoming acquisition of Ridgemar (Eagle Ford) LLC. The company has also offered $300M in senior notes, with the combined proceeds intended to fund the Ridgemar Acquisition.
These recent developments highlight Crescent Energy's commitment to disciplined capital allocation and sustainable growth for long-term shareholder value. The company continues to explore strategic mergers and acquisitions, while maintaining a solid balance sheet, with net leverage standing at 1.5 times.
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