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On June 23, Emerge Energy Services LP (NYSE: EMES) announced the widely awaited sale of its fuels business for a significantly higher-than-anticipated price.
Wunderlich’s Jason A. Wangler maintained a Hold rating on the company, while raising the price target from $9 to $12.
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A Positive Move
“The $178.5 million price tag was well ahead of our $100–$120 million estimate, surpassed previous management commentary, and will go a long way to reducing the ~$300 million of debt currently on EMES's books,” Wangler mentioned.
With the sale expected to close in 3Q16, the analyst believes the company is now better positioned to also adjust or amend its credit facility and reduce leverage and debt to improve liquidity.
However, Wangler also noted Emerge Energy would continue to lose money for several quarters going forward, with the company burning cash in 2016 and potentially 2017 as well.
“As such, EMES will need to finance this outspending in some form or fashion; we look for the company to try and add debt capacity, but given the run in the stock, we would not be surprised by an equity offering once filings are current,” the analyst said.
Crypto Whales Are Loading Up — Are You?
New research shows the biggest crypto buyers are back. And this time? They could hold for the possibility that Bitcoin will surpass $100,000 in 2024. You don’t want to miss the next massive crypto bull run like we saw in 2020 and 2021. To know exactly what’s going on and what to buy… Get Access To Benzinga’s Best Crypto Research and Investments For Only $1.