Comstock Resources Downgraded to Sell by UBS Amid Recent Run-Up.

Comstock Resources was downgraded to Sell by UBS with a $20 price target after gaining over 20% YTD. The bank cited the recent run-up in the stock as a reason for the downgrade.

Comstock Resources (NYSE: CRK) saw its stock drop by 2.5% in Thursday's trading after UBS downgraded the oil and gas producer to 'Sell' from 'Neutral' with a $20 price target. The move comes despite the stock being approximately 25% below its peak and more than 20% higher year-to-date (YTD).

UBS analyst Peyton Dorne cited several reasons for the downgrade, including the recent run-up in the stock and what the bank described as a "large valuation premium." Dorne pointed to potential downside risks from declining natural gas strip prices, an oversupplied balance of approximately 0.5 Bcfpd, and Comstock's leverage position and low free cash flow generation. Additionally, Dorne highlighted execution risk specific to Comstock, noting that the Western Haynesville region, which represents the company's primary growth driver, remains in the early stages of its development cycle.

Despite the downgrade, Comstock Resources reported strong financial performance for the first quarter of 2025, with earnings per share (EPS) of $0.18 and revenue of $512.8 million. Wolfe Research recently upgraded the stock from 'Peerperform' to 'Outperform' with a new price target of $34.00, citing strategic land acquisitions and resource expansion in the Western Haynesville region. Meanwhile, Mizuho maintained its 'Neutral' rating but raised its price target to $27.00.

Comstock Resources plans to continue its drilling activities in the Western Haynesville, with 20 wells scheduled for drilling and 15 wells to be turned to sales this year. The company is also focusing on developing its midstream assets to support growing production in the area.

References:
[1] https://seekingalpha.com/news/4466584-comstock-resources-cut-to-sell-at-ubs-after-recent-run-up
[2] https://www.investing.com/news/analyst-ratings/comstock-resources-stock-rating-downgraded-to-sell-by-ubs-on-valuation-93CH-4129547