HPK: Share Price Will Rise As Debt Reduction Drives Multiple Expansion

Analysts have raised their price target on HighPeak Energy by $2.75 to $12.00, citing expectations for valuation multiple expansion as the company executes in the Permian and works to reduce debt, despite only minor tweaks to the discount rate and fundamental assumptions.

Analyst Commentary

Bullish Takeaways

• Bullish analysts argue the stock screens as undervalued relative to Permian focused peers, given its current discount to projected cash flow and net asset value.
• They see room for valuation multiple expansion as the company demonstrates consistent well performance and operational execution in the Permian.
• Ongoing debt reduction is viewed as a key catalyst that can de risk the balance sheet and support a higher equity valuation over time.
• Analysts highlight that, as management narrows its strategic focus and improves capital discipline, the market may begin to re rate the company on a more sustainable growth and return profile.

Bearish Takeaways

• Bearish analysts remain cautious that leverage, while improving, is still elevated enough to constrain flexibility if commodity prices weaken.
• Concerns persist around the perceived quality and depth of drilling inventory, which could cap long term growth expectations and compress valuation multiples.
• Recent and potential future management changes introduce execution risk, with skeptics questioning the durability of the current strategic plan.
• Some investors worry that the path to multiple expansion is heavily dependent on flawless operational delivery and a supportive macro backdrop, leaving limited margin for error.

What's in the News

• HighPeak Energy completed repurchases of 2,407,421 shares, or about 1.89% of its outstanding stock, for $35.17 million under its February 5, 2024 buyback authorization, with no additional shares repurchased between July 1 and September 30, 2025 (company filing).
• On November 4, 2025, the Board appointed Michael L. Hollis as permanent Chief Executive Officer, formalizing his role as principal executive officer after serving as President and Interim CEO since September 15, 2025 (company filing).
• Hollis brings more than 25 years of oil and gas experience, including prior leadership roles as President and Chief Operating Officer at Diamondback Energy and drilling leadership positions at Chesapeake Energy, ConocoPhillips, and Burlington Resources (company filing).
• Earlier in 2025, longtime CEO and Chairman Jack Hightower retired from all company and HighPeak affiliated fund leadership roles. Hollis was named Interim CEO, and a new management committee was established to oversee HighPeak Energy Partners entities, which collectively own roughly 64.4% of HighPeak common stock (company filing).

Valuation Changes

• Fair Value Estimate remains unchanged at $9.25 per share, indicating no change in the base valuation framework.
• The Discount Rate has risen slightly from about 8.36% to about 8.64%, modestly increasing the required return applied in the valuation model.
• The Revenue Growth Assumption is effectively unchanged at around minus 7.14%, reflecting a stable outlook for top line trajectory.
• The Net Profit Margin is essentially flat at roughly 0.61%, indicating no meaningful shift in expected profitability levels.
• The Future P/E Multiple has risen slightly from approximately 34,027x to about 34,291x, reflecting a marginally higher implied earnings multiple in the model.