On Monday, Truist Securities updated its outlook for Comstock Resources (NYSE: NYSE:CRK) shares, increasing the stock's price target to $9.00 from the previous $8.00. The firm decided to maintain a Hold rating on the shares. The adjustment comes after a review and revision of their financial models, including updated forecasts for the years 2024 through 2026.
The new stock price target set by Truist Securities is based on a combination of two equally weighted valuation methodologies. The first method applies a 6.0x EV/EBITDAX multiple, which is notably higher than the peer average of 3.9x, to the firm's estimated 2025 EBITDAX of $1,271 million. This estimate is slightly below the consensus forecast of $1,343 million.
The second valuation method employed by Truist Securities considers a Free Cash Flow (FCF) to Enterprise Value (EV) Yield assumption of 9.0%. This dual approach to valuation reflects a comprehensive analysis of Comstock Resources' financial prospects in the coming years.
The Hold rating indicates that Truist Securities does not currently see significant upside or downside potential in Comstock Resources' stock, suggesting that the shares might trade around the current levels in the near term.
Investors in Comstock Resources will be monitoring the stock's performance to see if it aligns with Truist Securities' revised expectations and price target. The market's reaction to this updated financial outlook may influence the stock's movement in the upcoming trading sessions.
In other recent news, Comstock Resources Inc . faced a challenging first quarter in 2024 due to weak natural gas prices, despite operational advancements. The company reported oil and gas sales of $336 million and a cash flow of $182 million.
In response to the market conditions, Comstock Resources has reduced its rig count, suspended dividends, and made adjustments to its drilling program. The company also added 198,000 net acres to its Western Haynesville play and turned 18 wells to sales in the quarter. The borrowing base was reaffirmed at $2 billion, with liquidity increased to $1.3 billion after a bond offering.
Comstock Resources has over 30 years of drilling inventory and is strategically positioned to supply the growing LNG export market. The company's Western Haynesville asset may be more expensive to develop but offers higher gas recovery rates. These are among the recent developments at Comstock Resources Inc.
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