On Friday, Mizuho made an adjustment to Crescent Energy's (NYSE:CRGY) financial outlook, reducing the stock's price target to $13 from the previous $14, while maintaining a Neutral rating. The adjustment comes as a result of the firm's updated net asset value (NAV) model and financial forecasts, which now incorporate year-end 2023 reserves, revised type curves, and guidance for 2024.
Crescent Energy has demonstrated enhancements in capital efficiency, particularly with assets acquired recently. The company has also been active in implementing shareholder-friendly measures, such as transitioning to a fixed dividend structure, authorizing a $150 million stock buyback program, and the recent repurchase of 2 million Class B shares.
Despite outperforming its peers in the second half of 2024, Crescent Energy has not maintained this momentum year-to-date, resulting in the company's shares trading at a value consistent with its small to mid-size exploration and production (SMID E&P) peers. This is based on forecasts for 2025 free cash flow to enterprise value (FCF/EV) and enterprise value to earnings before interest, taxes, depreciation, depletion, amortization, and exploration expenses (EV/EBITDX).
The firm's assessment reflects Crescent Energy's current position in the market, which is deemed fair when considering the company's higher-than-average financial leverage, projected at approximately 1.5 times by the end of 2024, and the ongoing improvements in trading liquidity. The revised price target of $13 reflects these considerations and the firm's stance on the stock's valuation.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.