UPDATE: Sterne Agee Downgrades Approach Resources to Underperform, Names $22 PT on Pipeline Sale, Remaining Structural Concerns

In a report published Tuesday, Sterne Agee analyst Tim Rezvan downgraded the rating on

from Neutral to Underperform, and named a $22.00 price target. In the report, Sterne Agee noted, “Downgrade to Underperform on heels of recent rally, establish $22 PT. Sentiment has improved after a strong print for a sale of pipeline interests, but we believe this masks deeper structural concerns. Based on our modeling work, we do not see an exit from current FCF deficits, which could precipitate another capital raise in late 2014 or 2015 and limit the pace of accelerated development in the southern Midland Basin.” Approach Resources closed on Monday at $25.51.