KLR Group Upgrades SM Energy (SM) to Buy
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KLR Group upgraded SM Energy (NYSE: SM) from Accumulate to Buy with a price target of $43.00 (from $37.00).
Analyst John Gerdes commented, "We are upgrading SM from Accumulate to Buy and increasing our target price $6 to $43 due to the accretive impact of greater Midland Basin focus manifest in the Howard County acquisition partially offset by the substantive component of equity financing. The company’s capital intensity should improve ~5%, while oil-directed capital spending increases ~2%. Further, SM’s mid-cycle (’18) capital yield (cash recycle ratio) is now positive at ~110% (industry median ~125%) and therefore no longer warrants an incrementally lower equity discount rate."
Shares of SM Energy closed at $31.06 yesterday.
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