On Tuesday, Evercore ISI resumed coverage on Crescent Energy (NYSE:CRGY) with an Outperform rating and a price target of $17.00 per share. The firm highlighted Crescent Energy's successful track record in executing its acquire and exploit strategy, particularly following its recent acquisition of SilverBow Resources (NYSE:SBOW).
Evercore ISI emphasized the strategic consolidations within the traditional energy sector over the past 12-18 months, noting that both large and small entities are seeking to build scale and exit strategies. Crescent Energy's ability to engage in transactions in both private and public markets, coupled with an understanding of capital costs and financing, was cited as a key strength.
The firm acknowledged the recent transactions by Crescent Energy as positive steps towards increasing scale in core basins and proving the viability of its strategic approach. However, it also pointed out that funding these acquisitions through a mix of debt and equity could lead to normal course dilution and liquidity events in the early stages.
Evercore ISI suggested that while commodity prices will continue to significantly influence Crescent Energy's outlook, the company's stock may be in a period of adjustment following the transactions. The market is expected to eventually recognize the potential resource benefits and efficiency gains.
The report concluded by recognizing the time it takes to establish a track record of value creation through the acquire and exploit model, which can span decades and economic cycles. The firm pointed to Crescent Energy's last three major acquisitions, including the bolt-ons in the Western and Central Eagle Ford (NYSE:F) as well as SBOW, as evidence of the company's ongoing progress in this strategy.
In other recent news, Crescent Energy has reported robust second-quarter results for 2024, highlighting increased production and improved capital expenditure efficiency.
Wells Fargo and KeyBanc Capital Markets have adjusted their price targets for Crescent Energy to $21.00 and $16.00 respectively, both firms maintaining an Overweight rating on the stock. JPMorgan has initiated its coverage of Crescent Energy shares with a Neutral rating, citing a cautious outlook on oil market fundamentals and potential lower reinvestment returns compared to its peers.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.