UBS Starts SM Energy (SM) at Buy
UBS analyst Peyton Dorne initiates coverage on SM Energy (NYSE: SM) with a Buy rating and a price target of $36.00.
The analyst comments "We initiate coverage of SM with a Buy rating and a $36 PT. SM scaled and diversified its assets through the CIVI merger, with execution on the larger portfolio showing impressive early results. Achieving further cost savings and debt reduction are two near- term catalysts, which set up SM to inflect capital returns higher in 2027. SM's large valuation gap is still intact (2.6x 2027E EV/EBITDA vs. peers' 3.5x average), creating a positive risk-reward skew. Our $4.87Bn FY27 Adj. EBITDAX estimate trails Street's $5.04Bn, with the lower forecast likely due to Street estimates not yet being fully MTM. With SM trading at 2.6x FY27E EV/EBITDA, we see its shares pricing in $62/Bbl FY27 WTI vs. our $71/Bbl forecast."
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Shares of SM Energy closed at $29.89 yesterday.