- Callon Petroleum (CPE +0.7%) is initiated with a Buy rating and $17 price target at KLR Group, which praises the company for its exposure to the Permian Basin with a solid growth profile, superior capital yield and a strong balance sheet.
- KLR calculates that CPE's solid capital productivity, production composition (~78% oil) and low cost structure should generate a 2018 capital yield of ~195%, outperforming the group median of 130%.
- The firm also notes that CPE trades at 8.4x '17 EV/EBITDA, higher than the oil-dominant peer group median of 7.5x, although below the Permian median of 10.1x, and its production compound annual growth rate during 2016-18 of 23% is ~3.3x higher than its oil dominant peer group.