Mizuho Securities analyst Nitin Kumar CFA has reiterated their bullish stance on CRC stock, giving a Buy rating yesterday.
Nitin Kumar CFA has given his Buy rating due to a combination of factors including California Resources Corp’s (CRC) financial performance and strategic positioning. CRC’s second quarter financials revealed that they exceeded free cash flow estimates owing to lower capital expenditures, significantly below both Mizuho Securities USA and consensus expectations. This frugality translated into substantial cash returns for shareholders, with approximately 90% of this returned via share repurchases and increased dividends. Notably, the firm also demonstrated operational efficiency, raising the expected synergies from the Aera acquisition, particularly in the realms of interest expense savings and operational synergies.
Further justifying the Buy rating, Nitin Kumar CFA looked to future catalysts that are anticipated to bolster CRC’s performance, such as the potential approval of a Class VI permit and the resumption of drilling activities. The company’s guidance for the second half of 2024 aligns with current estimates and includes significant synergy savings which should enhance future cash flows. Additionally, the company’s focus on reducing spending to prioritize cash generation and shareholder returns, despite permitting restrictions in Kern County, indicates a strong strategic approach to navigating regulatory challenges. The valuation of CRC at $64 based on the NAV model reflects an attractive valuation compared to peers, with the expectation of robust free cash flow yields, which further supports the positive outlook for CRC.
Kumar CFA covers the Energy sector, focusing on stocks such as Conocophillips, HF Sinclair Corporation, and Coterra Energy. According to TipRanks, Kumar CFA has an average return of 15.2% and a 60.87% success rate on recommended stocks.
In another report released yesterday, TD Cowen also maintained a Buy rating on the stock with a $65.00 price target.
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California Resources Corp (CRC) Company Description:
California Resources produces oil and natural gas in California. At the end of 2018, the company reported net proved reserves of 618 million barrels of oil equivalent. Net production averaged 132 thousand barrels of oil equivalent per day in 2018 at a ratio of 75% oil and natural gas liquids and 25% natural gas.
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Publish date : 2024-08-06 19:17:00
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