KeyBanc Expresses Confidence in SM Energy's (SM) $12.8B Merger With Civitas Resources

SM Energy Company (NYSE:SM) is one of the low priced stocks to buy with high upside potential. On December 10, KeyBanc lowered the firm’s price target on SM Energy to $28 from $36, while keeping an Overweight rating on the shares. This sentiment was driven by a newfound confidence in the Civitas Resources Inc. (NYSE:CIVI) merger.

While Keybanc was initially skeptical of the deal, an analysis of the financial model and direct discussions with management have validated the merger’s strategic value. The firm’s conviction on SM Energy Company (NYSE:SM) now rests on three pillars: robust free cash flow generation, a rapid deleveraging schedule, and a disciplined debt management plan.

In Q3 2025, SM Energy Company (NYSE:SM) reported a net income of $155.1 million, or $1.35 per diluted common share. This earnings figure surpassed analyst estimates of $1.30 per share. Total revenue for the quarter reached $846 million, which met market expectations. Additionally, total net daily production increased 26% year-over-year in Q3. Oil production was a primary driver and surged 47%. Total net production volumes for the quarter reached 19.7 MMBoe, with oil accounting for more than 53% of that total. These results highlight the company’s successful acquisition and development strategies in its core Texas and Utah operating areas.

SM Energy Company (NYSE:SM) is an independent energy company that acquires, explores, develops, and produces oil, gas, and natural gas liquids in the state of Texas.

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