First quarter financials were strong and revealed an earnings (EBITDAX) margin of 62%. Morgans considers the highlight was confirmation that the company and infrastructure provider Enterprise had cleared the bottleneck which constrained production growth.
The broker notes, so far this year, the share price has only recovered half as much as the oil price. The broker suspects the discount has been triggered by investor conservatism regarding US/China trade tensions.
The disconnect is not expected to be sustained, with Sundance Energy set to accelerate both production and earnings growth. Add rating maintained. Target is reduced to $1.48 from $1.61.
Target price is $1.48.Current Price is $0.42. Difference: $1.06 – (brackets indicate current price is over target). If SEA meets the Morgans target it will return approximately 72% (excluding dividends, fees and charges – negative figures indicate an expected loss).