UPDATE: Citigroup Reiterates Buy Rating, Raises PT on Emerge Energy Services LP Following First Distribution Beats

In a report published Monday, Citigroup analyst John K. Tysseland reiterated a Buy rating on Emerge Energy Services LP EMES, and raised the price target from $21.00 to $26.50. In the report, Citigroup noted, “Yesterday after the close Emerge released their first distribution of $0.37 (pro-rated, equals $0.70) and their earnings release date of August 14. As the partnership pays out all of its cash flows as distributions, this implies results beat our estimates by ~13%. Frac sand sales were most likely better than forecast and we expect some positive benefit earned on RINs in the Fuels segment. We maintain our Buy/High Risk (1H) rating and are increasing our target price to $26.50. In our view, we believe our estimates could have upside over the next 12-18 months driven by higher than expected frac sand sales at the Barron plant and RIN-associated profits in the Fuels segment. Accordingly, we've adjusted our valuation matrix for a lower implied yield (9% vs. 12% prev.) and '14 EV/EBITDA multiple (9.5x vs. 7.8x prev.).” Emerge Energy Services LP closed on Friday at $23.76.