Wunderlich Securities Reiterates Buy Rating on Penn Virginia GP Holdings (PVG)

Wunderlich Securities is out with a research report this afternoon, where it reiterates its Buy rating on Penn Virginia GP Holdings

; it has a $26.00 price target on the stock. The WS analysts cited the company’s recent earnings distribution, which was slightly below the Street’s estimates. Along with the Q2 earnings distribution, PVR also updated guidance, which was largely raised including increased Cap-Ex for its coal segment and natural gas midstream segment. The WS analysts also noted that distributable cash flow per unit in Q2 was slightly above their estimates, by $0.01. Average gross royalty per ton realized in the coal segment in 2Q10 was $3.93 per ton versus their estimate of $3.30. Daily natural gas inlet volumes were 320 MMcf/day versus their estimate of 316 MMcf/day. As for valuation, the Wunderlich analysts said, “We use a blend of a discounted distribution model on our estimates through FY15 (10% discount rate, 4% long-term growth, $34.02), an applied yield value of 6.9% on our 3Q11 estimate ($25.43), and a sum-of-the-parts valuation on the various GP components ($19.63). Our blended, rounded target of $26 implies 42.3% total return potential.”