In a June 18 research note, John Freeman reported that Raymond James lowered its target price on SM Energy Co. (SM:NYSE) to $20 per share from $26 to account for recent weakness in commodity pricing. The oil and gas firm's current share price is around $12.10.
However, Raymond James also raised its Q2/19 and full-year 2019 volume estimates for SM Energy after management increased production guidance by 0.4 million barrels of oil equivalent on better-than-expected Q2/19 production so far. SM Energy's new figure implies about 3% higher production in Q2/19 than consensus and Raymond James' forecasts and about a 4% higher oil volume than previous guidance.
"Continued strong well results prove the quality of SM's acreage and the company's confidence in delivering on its 2019 development plans, supported by a roughly 1% increase to full-year volume guidance," Freeman indicated.
The analyst reiterated that the Colorado-based exploration and development company had encouraging results from its Wolfcamp D and Dean interval tests in the Permian Basin. "While there are no plans on the table, we think SM's efforts to prove up its south Texas acreage could foreshadow a potential sale process for the asset over the next one to years," he purported.
Raymond James has an Outperform rating on SM Energy.
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Disclosures from Raymond James, SM Energy Company, June 18, 2019
ANALYST INFORMATION
Analysts Holdings and Compensation: Equity analysts and their staffs at Raymond James are compensated based on a salary and bonus system. Several factors enter into the bonus determination, including quality and performance of research product, the analyst's success in rating stocks versus an industry index, and support effectiveness to trading and the retail and institutional sales forces. Other factors may include but are not limited to: overall ratings from internal (other than investment banking) or external parties and the general productivity and revenue generated in covered stocks.
The analyst John Freeman, primarily responsible for the preparation of this research report, attests to the following: (1) that the views and opinions rendered in this research report reflect his or her personal views about the subject companies or issuers and (2) that no part of the research analyst’s compensation was, is, or will be directly or indirectly related to the specific recommendations or views in this research report. In addition, said analyst(s) has not received compensation from any subject company in the last 12 months.
RAYMOND JAMES RELATIONSHIP DISCLOSURES
Certain affiliates of the RJ Group expect to receive or intend to seek compensation for investment banking services from all companies under research coverage within the next three months.
Raymond James & Associates, Inc. makes a market in the shares of SM Energy Company.
Raymond James & Associates received non-investment banking securities-related compensation from SM Energy Company within the past 12 months.
Additional Risk and Disclosure information, as well as more information on the Raymond James rating system and suitability categories, is available here.
