Dahlman Rose Reiterates Buy Rating on Cimarex Energy (XEC)

Dahlman Rose & Co. is out with a research report this morning, where it reiterates its Buy rating on Cimarex Energy Inc. (NYSE: XEC); it has a $85.00 price target on the stock. The Dahlman analysts cited the company’s gulf coast well inventory, its 12 rigs in the Permian Basin, and its eight rigs in the Midcontinent, saying that they believe XEC will grow production by 30% year over year in 2010. This estimate is above the company’s own estimate. As for valuation, the Dahlman analysts said, “We estimate XEC is trading at 5.1x 2011 EV/EBITDAX, below its peer group mean of 6.5x. We think XEC should trade at par to its peer group based on its growing Permian and Cana inventory, its strong cash flow profile (we estimate 3.3% free cash flow in 2010, and 2.6% in 2011), and its strong growth profile. We view our NAV of $83/sh as conservative due to our cautious risking of Permian inventory. We strongly reiterate our Buy rating, and we are quite comfortable with our current $85 price target.”