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Cimarex Energy: Analysts’ Recommendations and Target Price

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Nov. 20 2020, Updated 11:34 a.m. ET

Analysts’ recommendations

Based on Reuters data from 27 analysts tracking Cimarex Energy (XEC), 63% recommended a “buy,” while 37% recommended a “hold.” None of the analysts recommended a “sell.” On February 8, Susquehanna increased its target price on the stock by $14 to $88. On February 5, Stifel reduced its target price by $2 to $172.

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Target price

The mean target price for Cimarex Energy in the next year is ~$97, which implies a potential upside of ~27.7% from its last closing level. The mean target prices for Concho Resources (CXO), Pioneer Natural Resources (PXD), and Apache (APA) suggest potential upsides of 33.7%, 37.8%, and 11.8%, respectively. These companies are the Permian Basin’s top oil producers. They’re part of the S&P 500 Index’s (SPY) holdings in the upstream subsector. The Permian Basin accounts for 76.8% of Cimarex Energy’s total oil production.

No “sell” recommendations

Last month, none of the analysts had a “sell” recommendation for Cimarex Energy, according to data compiled by Reuters. On February 15, the WTI Cushing-Midland spread was at -$0.7. The WTI Cushing-Midland spread is crucial to Cimarex Energy’s oil realized prices. Due to a transportation bottleneck and rapid production growth in the Permian Basin, WTI-Midland usually trades at a discount to WTI-Cushing. WTI-Midland is the benchmark for oil produced in this region.

However, any upside in the spread could have a negative impact on Cimarex Energy’s earning. Cimarex Energy has a liquid-weighted portfolio of ~57%. Liquids include oil and natural gas liquids. Oil might outperform natural gas in 2019. Compared to Cimarex Energy, Concho Resources operates with a production mix of ~65% in oil has a lower downside risk to the WTI Cushing-Midland spread.

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