UPDATE: Wunderlich Securities Raises Halcon Resources Price Target due to Increased Drilling and Production.
According to a research report published this morning, Wunderlich Securities reiterates its Buy rating for Halcon Resources Corp (NYSE: HK) and raises its price target from $12 to $14.
Wunderlich mentions in the review, “The company's planned production growth was significantly higher than we had forecasted previously; specifically in 2013 as HK increases its drilling activity. We believe this growth would make HK one of fastest-growing E&Ps in the space in terms of both percentage and volume. HK announced it will offer $500 million in senior unsecured notes due 2020 to help pay for the GeoResources acquisition during 3Q12. The issuance should allow HK to keep a strong liquidity position as the company can utilize this cash to pay for the assets rather than drawing on its $225 million credit facility. We expect HK to monetize its 24,000 net acre position in the play, and we believe this could add around $300 million in cash based on recent deals in the area and GeoResources' strong well results over the past few years.We calculate HK trades at a 4.3x 2013E cash flow multiple versus the peer group trading at 3.9x. Based on the rapid growth rate and emerging asset base of HK, we believe it should trade at about a 50% premium to peers. We use a premium multiple of 5.6x to calculate our $14/share price target.”
Halcon Resources Corporation closed yesterday at $10.47.
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