Superior Energy Price Target Raised 53% At Imperial Capital, Upgraded

Superior Energy Services, Inc. SPN appears to have attractive leverage to a recovery in energy services, Imperial Capital’s Scott Levine said in a report. He upgraded the rating on the company from In-Line to Outperform, while raising the price target from $15 to $23.

Potential E&P Industry Upturn

“Recent indicators suggest that a sustainable recovery in the energy industry is approaching, given recent stabilization and-or improvement in oil and gas prices, and signs of a lift in U.S. onshore rig count, which has risen in six of the last seven weeks, and which we expect to continue to increase, albeit gradually,” analyst Scott Levine wrote.

Although Superior Energy’s 2Q16 results may not reflect any fundamental improvement, the impact of the industry upturn is likely to become more visible yearend 2016, Levine mentioned. He added that the results are likely to accelerate in FY17 and beyond, provided there is no “triple dip” in commodity prices.

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Attractive Name To Play The Recovery

Superior Energy enjoys an attractive positioning in onshore service lines, has recently taken cost cutting initiatives and its balance sheet is healthy. The company has a diverse mix of services and geographies, and has indicated plans to grow its US onshore presence in pressure pumping and drill pipe rentals.

All these factors make Superior Energy an “early-stage beneficiary of a potential E&P industry upturn” and an “attractive name to own in this recovery,” the analyst commented.

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