Mizuho Securities Reiterates Buy on Southwestern Energy (SWN) Following 3Q
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Mizuho Securities reiterated a Buy rating and $20.00 price target on Southwestern Energy (NYSE: SWN) following the company's 3Q earnings report. Many investors, expected more explicit 2017 growth and spending guidance with 3Q earnings. The lack of definitive news resulted in a sharp sell-off. However, all commentary received from management during the 3Q earnings call suggests the newly restarted drilling program is operating more efficiently than previously estimated.
Analyst Timothy Rezvan commented, "Updated modeling post-earnings suggests a more efficient '17 outlook than previously forecasted, given improving well productivity and lower cash opex. We view Friday's steep sell-off as a buying opportunity, considering it largely reflected investor disappointment that the company did not provide formal '17 guidance. Reading between the lines on management commentary during the earnings call, we believe the current five-rig program is likely to be a minimum level of activity in a $3/mcf gas world in '17, which can deliver mid-single digit production growth within cash flow, while reducing leverage to 2x in '17."
Shares of Southwestern Energy closed at $11.59 yesterday.
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