Analysts See Nearly 70% Upside for SM Energy (SM) Amid $12.8 Billion Civitas Merger Plans

SM Energy Company (NYSE:SM) is one of the best falling stocks to buy, according to Wall Street analysts. SM Energy Company (NYSE:SM) holds a Moderate Buy consensus from 9 analysts, with 4 Buys and 5 Holds. The average price target is $32.11, ranging from $23 to $42, implying a 68.56% upside from the current $19.05.

On November 20 at the Stephens Annual Investment Conference, the company reiterated that the anticipated merger with Civitas Resources will enhance its scale and capabilities. The two are poised to merge in a $12.8 billion deal, including debt.

The merger is to result in a combined company controlling about 823,000 net acres across the US shale basins. Once the deal closes, it should yield synergies of $200 to $300 million, translating into a net present value of $1 billion to $1.5 billion.

Additionally, the company expects to generate $1.5 billion in free cash flow and $1 billion from divestitures that should accelerate debt reduction. The bolstered balance sheet should support sustained capital returns and increased market capitalization for enhancing trading liquidity.

SM Energy Chief Executive Officer Herb Vogel comments: “This strategic combination creates a leading oil and gas company with enhanced scale, numerous value-adding synergies, and significant free cash flow, driving superior value to stockholders.”

SM Energy Company (NYSE:SM) is an independent energy company that acquires, explores, develops, and produces crude oil, natural gas, and natural gas liquids in the United States. Its primary operations are focused in Texas (Midland Basin and Maverick Basin) and Utah (Uinta Basin).

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Disclosure: None. This article is originally published at Insider Monkey.