UPDATE: Wunderlich Securities Downgrades Pioneer Energy Services Corp. to Sell, Reiterates $7 PT as Bifurcation Causes a Ceiling, Hurts Pricing/Utilization

In a report published Tuesday, Wunderlich Securities analyst Jason A. Wangler downgraded the rating on

from Hold to Sell, but reiterated the $7.00 price target. In the report, Wunderlich Securities noted, “We are downgrading Pioneer Energy Services (PES) from Hold to Sell and maintaining a $7 price target as the recent share price appreciation seems overdone in our view given the difficult macro-environment going forward. While Pioneer has some high-spec drilling rigs and other equipment that remains in high demand, we remain worried about the equipment that needs to be put to work in order to see Pioneer move back into positive EPS territory and the increased EBITDA needed to help reduce Pioneer's debt level. The company has seen utilization of its drilling fleet decline as rigs come off contract and with the push of E&Ps being toward higher-spec rigs we are concerned utilization and pricing could decline, causing us to move our figures lower and downgrade from Hold to Sell.” Pioneer Energy Services Corp. closed on Monday at $8.74.