UBS Analyst Sees Attractive Risk‑Reward in SM Energy Post‑CIVI Merger on Synergies, Deleveraging and Discount Valuation

Peyton Dorne, an analyst from UBS, has initiated a new Buy rating on SM Energy (SM).

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Peyton Dorne has given his Buy rating due to a combination of factors tied to SM Energy’s post‑merger positioning and valuation. Following the CIVI acquisition, SM has expanded and diversified its asset base, delivered better‑than‑expected early operating results, and identified larger synergy savings, all while keeping its spending plans stable, which supports confidence in future performance.

At the same time, SM is actively reducing leverage, improving its balance sheet, and increasing shareholder returns through higher dividends and growing buybacks, with an inflection in capital returns anticipated around 2027. The shares trade at a notable discount to peers on forward EV/EBITDA and embed a conservative oil price relative to UBS’s assumptions, leading Dorne to see a favorable risk‑reward setup despite the primary risk of weaker oil prices slowing deleveraging and buyback growth.

In another report released on July 9, J.P. Morgan also maintained a Buy rating on the stock with a $36.00 price target.

SM’s price has also changed dramatically for the past six months – from $18.570 to $29.720, which is a 60.04% increase.