UPDATE: Citigroup Raises PT on Emerge Energy Services LP on Multiple Positive Factors
In a report published Monday, Citigroup analyst John K. Tysseland reiterated a Buy rating on Emerge Energy Services LP (NYSE: EMES), and raised the price target from $26.50 to $36.00.
In the report, Citigroup noted, “On Aug 29th EMES released an 8-K disclosure that alluded to distribution potential of $4/unit and a stabilizing frac sand price environment. Following a 13% run-up in price (and 85% since May's IPO), we find ourselves revisiting the Emerge story and asking the question: Do we think the $4.00/unit is achievable and would we still be buyers today? In short: Yes on both accounts. We remain at Buy/High Risk (1H) as in our view Emerge remains undervalued and offers investors a compelling combination of: 1) ~26% NTM distribution growth (7% prev.) driven by additional sales at Barron and a stabilizing price environment; 2) no GP IDR burden that we believe makes a compelling case for a take-out down the road; 3) a structure not constrained by a MQD that offers operational flexibility; and 4) additional growth opps from near-term JVs, partnerships, and/or sand mine/plant acquisitions.”
Emerge Energy Services LP closed on Friday at $31.46.
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