UPDATE: Bank of America Initiates Emerge Energy at Buy on Frac Sand Demand

In a report published on Tuesday, Bank of America analyst Douglas L. Becker initiated a Buy rating on Emerge Energy EMES and announced a $27 price objective for the company.

In the report, Bank of America commented that, "EMES is the one of the largest producers of raw sand and is well positioned with rail connectivity to the major oil and gas basins in the US and Canada. Based on our basin-by-basin demand model, we forecast frac sand demand to grow 9% in 2013 and 10% in 2014, with stable pricing. Contracted sand volumes account for over 75% of our 2013 forecast." Douglas went on to report that, "EMES has several growth opportunities not included in our estimates. Simply assuming full utilization of the Barron, WI mine could add $40mn to annual EBITDA. A second wet plant at the Barron plant could add another $40mn, while unused transmix capacity at the Birmingham, AL facility could add $10mn."

Emerge Energy closed on Monday at $19.72