Mizuho Reduces Target Price on SM Energy (SM) to $31, Following Q4 Earnings Release

SM Energy Company (NYSE:SM) is one of the 14 Most Undervalued NYSE Stocks to Buy According to Analysts.

Mizuho, on February 26, reduced its target price on SM Energy by 8.8% to $31 (from $34). Despite the price target cut, the firm retained its Outperform call on the stock. This update comes a day after SM Energy released its Q4 and full-year 2025 earnings on February 25.

SM Energy, in the 4th quarter, delivered diluted adjusted earnings per share of $0.83, which is just a tick below the street consensus estimate of $0.85. This print represents a ~57% YoY drop vs. Q4 2024 and was driven primarily by lower global oil and gas prices, combined with flat net production volume. Despite this large drop, adjusted free cash flow to the firm increased slightly YoY due to significantly lower CapEx spend.

Moving forward in 2026, the company plans to continue this strategy of focusing on value (through disciplined capital investments and greater focus on higher-margin products/commodities), rather than on volume, to maximize free cash flows.

The company is also looking to capture the value-accretive synergies over the next two years from its merger with Civitas (which closed on January 30). Management has already identified $200 million in annual cost synergies, ~80% of which have been actioned. They also believe that they can extract an additional $100 million in annual savings.

The additional free cash flows from these initiatives, combined with the $950 million proceeds from the company’s divestiture of certain South Texas assets (which Stephens thinks is “positive”), will be used to enhance the company’s return of capital program and accelerate its debt reduction.

SM Energy Company (NYSE:SM) is an energy company engaged in the acquisition, exploration, development, and production of oil, gas, and natural gas liquids. The company is based in Denver, Colorado, and was founded in 1908.

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