Northern Midland Basin Expansion Set To Boost SM Energy: Analyst Lifts EPS Estimates

Susquehanna analyst Biju Perincheril reiterated a Neutral rating on the shares of SM Energy Company SM, raising the price target to $32 from $30.

The analyst notes that the company is expected to gain from Austin Chalk exploration results, increased capital return, and continued improvement in operating costs.

In the recently reported second quarter, the company said it expects production for the year to increase, while capex and LOE at the midpoint are expected to reduce. 

Also Read: SM Energy Shares Up On Revised Q2 And 2023 Outlook

The analyst highlights SM's decision to add 20,000 acres in the Northern Midland Basin, which is expected to target the Dean and Middle Spraberry sand intervals. 

Based on the above, Perincheril raised the FY23 EPS estimate to $5.28 from $4.82.

For FY24, the analyst sees EPS of $5.66, higher than the previous estimate of $5.46.

For FY25, the analyst boosted the EPS estimate to $5.66 from the previous expectation of $5.46.

Price Action: SM shares are trading lower by 3.90% to $28.60 on the last check Thursday.