SM Energy price target lowered to $28 from $36 at KeyBanc

KeyBanc lowered the firm’s price target on SM Energy (SM) to $28 from $36 and keeps an Overweight rating on the shares. The firm was candid in recent reports about its view on Civitas (CIVI) and its initial concerns on the merger. After receiving more details, speaking with management and working through the model, KeyBanc comes away more confident. It sees robust free cash flow, rapid deleveraging and a prudent plan to manage the debt stack. Regaining investor confidence takes time, but the firm thinks the process is underway and financial and operational execution will help.