UPDATE: Stifel Nicolaus Upgrades Halcon Resources to Buy Following 1Q Earnings Call
In a report published Wednesday, Stifel Nicolaus analyst Amir Arif upgraded the rating on Halcon Resources Corp. (NYSE: HK) from Hold to Buy, and named an $8.50 price target.
In the report, Arif noted, “Over the past year, HK has underperformed the EPX by 40%, creating an attractive entry point, in our view. During its 1Q earnings call, HK disclosed that 2013 guidance will fall, which has removed most of the near-term risk. From here, we expect strong organic production growth, versus acquisition-driven growth to date, and meaningful resource test results to start coming out for the remainder of 2013, including in the Utica, Wilcox, and El Halcón plays. Organic driven growth should be more accretive to value creation, than the acquisition-driven growth thus far, and the resource results should help firm up the underlying NAV, which is almost double where HK currently trades. As a result, we would be aggressive buyers of HK at these levels and are upgrading the stock to a Buy with a $8.50/sh target price, reflecting 78% of our risked NAV and 6.5x its 2014E EV/EBITDA multiple, including the upcoming potential effects from the early 2014 share dilution.”
Halcon Resources Corp. closed on Tuesday at $6.43.
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