UPDATE: Topeka Capital Markets Initiates Coverage on Athlon Energy on Good Upside Potential

In a report published Tuesday, Topeka Capital Markets analyst Gabriele Sorbara initiated coverage on

with a Buy rating and $40.00 price target. In the report, Topeka Capital Markets noted, “We are initiating coverage of Athlon Energy with a Buy and $40 PT. ATHL holds ~102,000 net acres in the Midland Basin, which we believe are prospective for numerous horizontal zones. Based on our analysis, offset operators' results have de-risked a majority of ATHL's acreage for multiple horizontal zones. The greatest upside to the ATHL story is around the potential in Howard county (~55,000 net acres), which has seen less horizontal activity; however, early results and data from peers are encouraging. While the Company is early in its horizontal development, management has executed operationally in its vertical program, and following the initial public offering, ATHL is well positioned financially to drive production, reserve and cash flow growth. Despite the outperformance since its IPO (shares up 55.8% since 8/2/13 vs. the Permian peers which are down an average of 1.0%), we conservatively see greater than 28% upside.” Athlon Energy closed on Monday at $30.86.