Canaccord Genuity Raises Price Target on Concho Resources (CXO) Following Acuisition of Midland Acreage
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Canaccord Genuity reiterated a Hold rating on Concho Resources (NYSE: CXO), and raised the price target to $120.00 (from $104.00), following the company's acquisition of quality Midland acreage. The acquired leasehold sits mostly in southwest Martin and southeast Andrews Counties, a core area of the Midland Basin.
Analyst Sam Burwell commented, "CXO's acquisition of Reliance Energy's ~40K net acres implies ~$28K/flowing Boe, a bit below both SM's acquisition in Howard and PE's in Glasscock. Between the followon offering and shares issued to the sellers, the acquisition will be completely equity funded. Given that we assume three incremental rigs on the new acreage in 2017, we see the deal as accretive. In terms of value impact, we view the ~20% growth guidance for 2017 as the bigger near-term positive as that level of growth makes CXO significantly less expensive. In our view, however, we still believe shares are fully valued at these levels."
Shares of Concho Resources closed at $131.78 yesterday.
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