Basic Energy Services Falls 10% Amid Imperial Capital Price Target Drop

Imperial Capital maintained its Outperform rating but lowered its price target on Basic Energy Services, Inc BAS from $31 to $23 in a report issued Monday.

Analyst Scott Levine believed the company "is well positioned to benefit from a recovery in U.S. onshore E&P activity, given its diverse service portfolio and attractive geographic footprint. Although recent volatility in commodity prices poses downside risk, we view BAS’ growth prospects and valuation as attractive at current levels."

Despite the positive comments, the firm tempered its outlook for FY 2015.

The firm raised its "FY14 EPS estimate to $0.55 from $0.43 in accordance with new guidance," but lowered its "FY15-16 estimates [to] reflect more modest growth (+7 percent, vs. our prior +11 percent assumption) and slightly lower margins, as conditions remain competitive in Fluid and Well."

The report concluded that the "price target of $23 assumes 4.35x our FY16E EBITDA estimate, and offers 65 percent potential upside from recent levels. At 4.4x FY14E EV/EBITDA, BAS trades at a slight discount to the small/mid-cap oilfield services peer group average, and offers attractive upside potential."

Basic Energy Services, Inc recently traded at $12.56, down 9.71 percent.