SM Energy: Mizuho raises PT to $44 from $42, maintains Outperform rating

SM Energy: Mizuho raises PT to $44 from $42, maintains Outperform rating

SM Energy Co. [SM] received a positive upgrade from Mizuho Securities, with the price target (PT) raised to $44 from $42, while maintaining the Outperform rating. This move comes on the heels of the company's strong second-quarter performance, as highlighted in its recent 10-Q report and earnings call.

The company reported total operating revenues and other income of $792.9 million, marking a 25% increase compared to the same period last year. This growth was driven by higher production volumes and improved pricing. Income from operations stood at $294.9 million, reflecting robust operational performance with a focus on cost management and efficiency. Net income was $201.7 million, a slight decrease from the previous quarter, primarily due to lower realized prices for oil and gas. The basic and diluted net income per common share remained at $1.76, indicating minimal dilution from outstanding securities [1].

SM Energy's business highlights include significant contributions from the Midland Basin, South Texas, and Uinta Basin. The Uinta Basin, acquired in October 2024, has been successfully integrated and contributed significantly to the company's production increase. The Midland Basin saw a 3% increase in production, while the Uinta Basin experienced a 25% increase. Average net daily equivalent production increased by 6% sequentially to 209.1 MBOE, with the Uinta Basin contributing significantly to this increase [1].

During the second quarter of 2025, SM Energy operated three drilling rigs and one completion crew in the Uinta Basin, focusing on delineation and development. This strategy aims to optimize operations and deliver sustained value from this core asset. The company's capital program for 2025 is expected to be approximately $1.375 billion, focusing on strategic inventory replacement and growth [1].

Mizuho Securities' upgrade reflects the company's strong operational execution and financial performance. The analysts noted that SM Energy's record production volumes and operational efficiency have driven a strong financial beat across many metrics. The company's ability to manage commodity price volatility through its hedging program and maintain a disciplined approach to capital allocation has been highlighted as key factors contributing to the upgrade [2].

SM Energy's second quarter showcased record production volumes, successful integration and optimization of Uinta Basin assets, and strong progress toward leverage reduction goals. The company reaffirmed guidance for 2025 production and updated capital guidance, while highlighting continued operational execution, technological advances, and robust liquidity. Management emphasized a disciplined approach to capital allocation, prioritizing debt reduction and free cash flow, and remains focused on maximizing shareholder returns as it moves into the second half of the year [2].

References:
[1] https://www.tradingview.com/news/tradingview:c2a859dabbc1b:0-sm-energy-co-sec-10-q-report/
[2] https://seekingalpha.com/news/4476813-sm-energy-reaffirms-2025-production-guidance-of-200000-215000-boe-per-day-while-targeting-1x