Credit Suisse is excited that XTO Energy (XTO) is “bulking up” with its $4.2 billion acquisition of Hunt Petroleum. More importantly, it believes the deal will be significantly accretive.
We see the transaction as accretive and a good fit with significant resource potential in areas well known to XTO.
CS maintains OUTPERFORM and raises estimates:
We are raising our 2008/2009 EPS estimates by 10%/12% to $4.63/$6.21 from $4.21/$5.54 to reflect volumes acquired through the Hunt deal partially offset by a higher share count and interest expense. We estimate the deal is a respective 7% and 10% accretive on 2008 and 2009 cash flow per share (CFPS). Our target price remains unchanged at $77, which is based on a 10% discount to our $86 NAV estimate.
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