UPDATE: Topeka Initiates Bonanza Creek Energy with Hold Rating on Higher Risk/Reward Tradeoff
In a report published Wednesday, Topeka Capital Markets analyst Gabriele Sorbara initiated coverage on Bonanza Creek Energy (NYSE: BCEI) with a Hold rating and $42.00 price target.
In the report, Sorbara noted, “While we like the Company's position and upside in the core Wattenberg Niobrara play, we see a higher risk/reward tradeoff for shares following the recent run up [up 38.8% year-to-date vs. the PHLX SIG Oil Exploration and Production (EPX) which is up 9.6% over the same period]. We believe the industry has de-risked a majority of the Core Niobrara in the Wattenberg field and believe this is reflected in the current share price outperformance for Niobrara players. We believe upside may emerge from an accelerated drilling program, which would increase cash flow and accelerate NAV creation, although, at this time we would look for some consolidation before building or adding to a position.”
Bonanza Creek Energy closed on Tuesday at $38.56.
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