Seeking Alpha

SM Energy suffers two more downgrades, shares -20% in two days

  • The downgrades keep coming for SM Energy (SM -2.9%) after disappointing Q4 results and increased uncertainty around Eagle Ford production which have cut shares by nearly 20% in the past two sessions.
  • UBS downgrades SM to Neutral from Buy and lowers its target to $82 from $94, expecting shares to remain range bound until the company can deliver several quarters of solid execution particularly in its core assets.
  • Howard Weil cuts shares to Sector Perform from Outperform with a $93 target, down from $106, thinking investors likely will need to wait until results from increased lateral length and sand loads on Eagle Ford wells are announced, which could be late Q2 at the earliest.
Comments (3)
  • It's a GAS. No pun intended. They all DOWNGRADE after the news and big price drop.

     

    If you realize there is no such thing as earnings, so you can't have an earnings miss, that will be a VERY valuable lesson for all investors. There is balance sheets and cash and cash flow and cap-ex and dividends and buybacks. Especially in a capital intensive business like oil and gas E&P. So it's cash in and cash out.

     

    SM hit their high end of the 4Q production forecast and EBITDA growth looked good. They also maintained their 2014 production numbers etc etc.....

     

    WHERE IS THE BEEF. IMO the street just cooks this stuff up so they can get people to trade and trade in size so the broker/dealer and market makers can make some more coin by trading against the crowd.

     

    Some part of SM's Eagleford is not doing so well, and the jury is out if it's the rocks or the rock scientists.......ie...... the company falling behind the peer group in that part of the play...............But no problem for a company the size of SM. They have plenty of other acres in EF and other plays to go drill.

     

    Reserves and production are growing nicely. You just got a 20% off sale price.
    I bought some yesterday and may add more if it continues to drift lower.
    20 Feb, 05:05 PM Reply Like
  • Agreed- I bot some yesterday, more today.

     

    Two measures I look at are ebitda/total liabilities and ebitda/market cap. Those numbers for Q4 show SM as strong financially and getting stronger, and cheap. at today's closing price, trailing 12 mo ebitda is 29% of market cap and 46% of total liabilties.

     

    Proven reserves increased 46% as of 12/31/13 vs y/e 2012. that ain't hay.
    20 Feb, 06:03 PM Reply Like
  • MBOE/d is staying steady through 2014 versus year end 2013. Not seeing much production growth here.
    27 Feb, 05:04 PM Reply Like
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