Sell Rating on Comstock Resources: Execution Risk, Leveraged Balance Sheet, and Fully Priced NextEra Upside Limit Near- to Medium-Term Risk/Reward

Analyst Peyton Dorne of UBS maintained a Sell rating on Comstock Resources, retaining the price target of $18.00.

Peyton Dorne has given his Sell rating due to a combination of factors that, in his view, limit the near- to medium-term risk/reward for Comstock Resources’ equity. While the prospective partnership with NextEra around a Western Haynesville–adjacent power hub could eventually boost revenue, improve pricing, and lower transportation and treatment costs, these benefits are still contingent on a hyperscaler committing to the project and on a multi‑year build‑out schedule. The reliance on a greenfield development, which must progress through additional contracting and construction milestones, adds execution risk and delays the timing of any material EBITDA uplift. In addition, leverage remains meaningful, with net debt to EBITDA projected at 2.6x in 2025, which can constrain financial flexibility if gas markets soften or project timelines slip.

At the same time, Dorne appears to view the current valuation as already reflecting much of the upside from the NextEra opportunity and the potential longer-term monetization value of the Pinnacle Gas System. The fact that the power hub remains in a pre-construction phase, with only initial turbine orders and phased capacity (starting around 2 GW) anticipated toward 2027–2028, suggests that investors may be overestimating the speed and certainty of cash-flow improvements. Until there is a firm hyperscaler agreement and clearer visibility on project execution, CRK’s earnings profile remains heavily tied to the LNG corridor and broader gas price volatility. Given these dynamics, Dorne concludes that downside risks and execution uncertainties outweigh the identified strategic positives, justifying a Sell recommendation at current levels.

Dorne covers the Energy sector, focusing on stocks such as Comstock Resources, Matador Resources, and Gulfport Energy. According to TipRanks, Dorne has an average return of 0.4% and a 60.00% success rate on recommended stocks.

In another report released on December 19, Piper Sandler also maintained a Sell rating on the stock with a $8.00 price target.