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California Resources maintains stock target, Outperform rating

EditorNatashya Angelica
Published 06/14/2024, 11:16 AM

On Friday, RBC Capital Markets sustained their Outperform rating and $65.00 stock price target for California Resources Corporation (NYSE:CRC), following a virtual meeting with the company's top executives about upcoming ventures, particularly in their Carbon Management Business.

The discussion with President & CEO Francisco Leon and EVP & CSO Chris Gould highlighted new greenfield opportunities, including data centers, where California Resources Corporation's ability to offer carbon-free and behind-the-meter power solutions stands out as a competitive advantage.

The recent assessment by RBC Capital Markets suggests that the market is progressing rapidly and that California Resources is strategically positioned to capitalize on these developments. According to the firm, the scale and reach of these opportunities are substantial, potentially doubling the value of the company within the next five years.

During the virtual call, several key discussion points were brought up, emphasizing the company's strategic initiatives and future growth prospects. RBC Capital Markets underlined the importance of California Resources Corporation's differentiated offerings in the context of a fast-moving market.

California Resources Corporation is actively exploring new avenues to leverage its Carbon Management Business, aiming to meet the growing demand for sustainable and renewable energy solutions. The focus on carbon-free power for data centers is particularly notable, as these facilities are increasingly seeking ways to minimize their environmental footprint.

RBC Capital Markets' reiterated price target of $65.00 reflects confidence in the potential of California Resources Corporation's strategic initiatives to significantly enhance its market value. Interested parties were encouraged to reach out to their RBC representative for further details on the discussion points from the virtual call.

In other recent news, California Resources Corporation (CRC) has been making significant strides in its business operations. The company reported solid Q1 2024 results, with $149 million in adjusted EBITDAX and $33 million in free cash flow.

CRC also announced its intention to offer $500 million in senior unsecured notes due 2029, with the proceeds earmarked for the repayment of existing debts of Aera Energy, LLC and its operating affiliate Aera Energy Services Company. This is in preparation for the anticipated merger with Aera Energy, which is expected to significantly improve CRC's financial standing and free cash flow profile.

RBC Capital has maintained its Outperform rating on CRC shares, highlighting the company's carbon management business and potential expansion into powering California data centers with carbon-free solutions. The firm's analysis suggests that these initiatives could substantially increase the company's market value.

Recent developments also include CRC's exploration of carbon management and the potential investment decision on its first Carbon Capture and Storage (CCS) project by the end of 2024. These strategic moves and financial health indicators are part of the company's recent developments that investors are keeping a close eye on.

InvestingPro Insights

In light of RBC Capital Markets' optimistic outlook on California Resources Corporation (NYSE:CRC), current data from InvestingPro offers additional insights into the company's financial health and market performance. With a market capitalization of $3.36 billion and a P/E ratio of 13.47, the company presents a value proposition in the energy sector.

Notably, the company has a strong track record of profitability, having been profitable over the last twelve months, and analysts predict it will continue to be profitable this year. This aligns with RBC's view of the company's potential for growth, especially in the Carbon Management Business.

InvestingPro Tips indicate that California Resources Corporation has raised its dividend for three consecutive years, which may appeal to income-focused investors. Moreover, the company's liquid assets exceed its short-term obligations, suggesting a solid financial footing for pursuing its strategic initiatives. For investors seeking a deeper analysis, there are 6 additional InvestingPro Tips available, which can be accessed for further investment considerations. To explore these additional tips and gain more comprehensive insights, use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.

These financial metrics and strategic strengths underscore the potential that RBC Capital Markets sees in California Resources Corporation's future ventures, particularly in the emerging carbon-free and renewable energy solutions market.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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