California Resources stock price target raised to $68 from $65 at TD Cowen

California Resources (CRC) is acquiring Berry Corporation (BRY) in an all-equity transaction valued at $717 million, including debt, offering a 15% premium to BRY shareholders. This strategic acquisition, following the lifting of California's drilling moratorium, is projected to yield $80-$90 million in annual synergies and increase CRC's free cash flow per share by 14%. Consequently, TD Cowen raised CRC's price target to $68 from $65, maintaining a Buy rating, citing the deal's positive implications and favorable valuation metrics.

Analysis

California Resources Corporation (CRC) is executing a strategic, all-equity acquisition of Berry Corporation (BRY) for an enterprise value of $717 million, which includes a 15% premium for BRY shareholders. The transaction is fundamentally underpinned by a favorable shift in the regulatory landscape, specifically the lifting of California's drilling moratorium via bill SB-237. From a financial standpoint, the deal is projected to be highly accretive for CRC, with management anticipating $80-$90 million in annual synergies and a 14% increase in free cash flow per share within the first year. This positive outlook is endorsed by TD Cowen, which reiterated a Buy rating on CRC and raised its price target to $68.00 from $65.00. The acquisition appears financially astute, as CRC is acquiring BRY at a valuation of 2.9x FY25E EBITDAX, a notable discount to CRC's own trading multiple of 4x. While BRY recently reported a significant Q2 2025 EPS miss, this was offset by a substantial revenue beat of 36.19% and is supported by strong underlying fundamentals, including a 55% gross profit margin and an eight-year history of dividend payments.

Key Decisions for Investors

• For CRC investors, the acquisition appears strongly accretive, supported by significant synergy targets, a projected 14% FCF per share increase, and a positive analyst price target revision, reinforcing the bullish case for the stock.
• Investors should monitor the execution risk associated with the integration, as the realization of the projected $80-$90 million in annual synergies is critical to achieving the deal's full value proposition.
• Berry Corp. shareholders are realizing a 15% premium and should evaluate the long-term prospects of holding shares in the larger, combined entity versus their standalone investment, considering the exchange into a company with a different valuation profile but significant projected growth.