Overview
Stephens has adjusted its target price for SM Energy (NYSE:SM) upward to $49 from $48 while leaving the stock's rating at Overweight. The new target implies material upside relative to SM Energy's most recent market price of $23.40, which the firm noted has climbed 11.38% over the past week.
Divestiture and valuation context
Stephens flagged SM Energy's announced sale of assets - described in company communications as 61,000 net acres and 38 MBoepd in the Eagle Ford - for $950 million as a constructive development. The firm calculated the transaction equates to roughly $25,000 per Boepd, which it says is slightly below the average of comparable Eagle Ford deals executed over the previous three years. InvestingPro's analysis, referenced by Stephens, indicates SM Energy appears undervalued relative to its Fair Value.
Execution against targets
SM Energy nearly reached its stated $1 billion divestiture goal in under half of the originally expected timeline. The company had set a one-year window for achieving that objective starting from the Civitas merger close on January 30, 2026. Stephens updated its NAV-based target price to $49 from $48 in response to the transaction and related developments, while maintaining the Overweight rating.
Financial metrics and capital structure
Stephens reiterated several financial data points in its view of SM Energy: a price-to-earnings ratio of 3.65 and a dividend yield of 3.42%. InvestingPro's comprehensive research noted that the company has sustained dividend distributions for 33 consecutive years. Management appears on track, in Stephens' view, to lower leverage toward a 1.0x target by year-end 2026.
Related corporate developments
Separately, the company disclosed an agreement to sell its South Texas assets to Caturus Energy, LLC for $950 million in cash. That package was described as including about 61,000 net acres and roughly 260 producing wells in the southern Maverick Basin, with expected full-year cash flows of approximately $160 million.
SM Energy also announced an auditor change: Deloitte & Touche LLP will replace Ernst & Young LLP as the company’s auditor, effective after the completion of the 2025 audit.
Credit ratings and broker activity
Following the Civitas merger, S&P Global Ratings upgraded SM Energy to a 'BB' rating, citing gains in size, scale and geographic diversity. Fitch Ratings likewise raised the company’s Long-Term Issuer Default Rating to 'BB+' and cited increased production scale and proved reserves. The merger has coincided with a substantial rise in gross debt to approximately $8 billion. KeyBanc has maintained an Overweight stance on SM Energy, assigning a $28.00 price target even after trimming its capital expenditure and production forecasts.
Conclusion
Stephens’ modest NAV-based increase and continued Overweight recommendation follow SM Energy’s rapid divestiture execution and the post-merger shifts in ratings and auditor oversight. The combination of realized asset sales, a path to reduced leverage and maintained dividend coverage are central to the brokerage’s assessment, while gross debt and near-term operating forecasts remain parts of the broader market view.