On Thursday, JPMorgan updated Crescent Energy's (NYSE:CRGY) price target, increasing it to $18.00 from the previous $16.00, while maintaining a Neutral rating on the stock. Currently trading at $16.68, the stock has shown remarkable strength with a 57.6% return over the past year and is approaching its 52-week high of $16.94.
The revision reflects the anticipated impact of the Ridgemar acquisition and recent upticks in commodity prices. According to InvestingPro, the stock's RSI suggests it's in overbought territory, with 12 additional exclusive insights available to subscribers.
Crescent Energy is expected to deliver fourth-quarter production figures that align with consensus estimates, with projections of 254 thousand barrels of oil equivalent per day (MBoe/d), including 100 MBoe/d of oil. This is in close agreement with the consensus forecast of 255 MBoe/d.
The estimated fourth-quarter EBITDAX (earnings before interest, tax, depreciation, amortization, and exploration expenses) is $489 million, closely matching the consensus of $487 million. However, JPMorgan's cash flow per share (CFPS) estimate of $1.70 is slightly below the street estimate of $1.76.
The company's capital expenditures for the fourth quarter are modeled at $220 million, which is less than the street's estimate of $230 million, with a forecasted free cash flow (FCF) of approximately $180 million before changes in working capital. JPMorgan's fourth-quarter earnings per share (EPS) estimate of $0.21 is notably lower than the current street estimate of $0.46, factoring in $55 million of non-cash general and administrative costs related to acquisitions, divestitures, and equity issuances.
Crescent Energy's well productivity trends have been highlighted, showing a year-over-year increase in oil production in different regions of the Eagle Ford (NYSE:F) asset. With revenue growth of 12.6% in the last twelve months, the company's recent Ridgemar deal, a $905 million acquisition expected to close at the end of January 2025, will potentially add 20 MBoe/d of production volumes and 140 gross locations to Crescent Energy's assets. InvestingPro analysis indicates the company operates with a significant debt burden, with a debt-to-equity ratio of 1.13x.
With an overall Financial Health score rated as "GOOD" by InvestingPro, looking ahead to 2025, JPMorgan forecasts Crescent Energy's total production volumes at 263 MBoe/d, with a capital expenditure program of $1,050 million.
The company's comprehensive Pro Research Report, available to subscribers, provides detailed analysis of its financial position among 1,400+ top US stocks. Oil production is estimated at 110 MBoe/d, which is slightly below the street estimate of 112 MBoe/d.
The analyst anticipates the company to focus on debt reduction after funding its base dividend, modeling $400 million and $300 million of deleveraging for 2025 and 2026, respectively. This would reduce the leverage ratio from approximately 1.4x at the end of the first quarter of 2025 to around 1.0x at the end of 2026, based on current pricing trends.
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