SM Energy Co. (SM)

We believe that SM Energy Company's (SM - Analyst Report) emerging core portfolio is a catalyst for visible organic growth over the next several years. The company's earnings in the third quarter more than doubled from the prior-year, buoyed by higher operating income, increased production and recognition of a gain on divestiture activity.

The company's Eagle Ford and Bakken assets are key drivers of liquids growth. SM Energy has significant leasehold positions in the leading U.S. shale plays, including the Niobrara, Haynesville and Granite Wash, which we believe will provide the company with multiyear profitable drilling inventory.

Considering these factors, we are maintaining our recommendation at Outperform. Our $94 price objective reflects a multiple of 13.3x the trailing the 12-month cash flow.

SM Energy Co. (SM) : FULL ANALYST REPORT

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