UPDATE: Bank of America Reiterates Buy Rating, Raises PT on Emerge Energy Services LP as Significant Distribution Growth is in the Works

In a report published Monday, Bank of America analyst Vaibhav Vaishnav reiterated a Buy rating on Emerge Energy Services LP EMES, and raised the price target from $50.00 to $61.00. In the report, Bank of America noted, “We maintain our 2014 distribution estimate at $4.30 per unit for Emerge (EMES), above guidance of $3.80-$4.00 as we expect accelerating frac sand demand. Critically, EMES announced two new frac sand facilities that would more than double EMES' capacity by the end of 2014 (currently 4.1mn tpa). Our 2015 distribution estimate increases to $6.35 per unit from $4.75 and is more than 50% higher than annualized 4Q13. Emerging pricing power for frac sand provides further upside. Our PO increases to $61 from $50 assuming a 7.0% yield, below the 7.4%-9.6% range given the expected distribution ramp. Using the 2015 distribution and an 8.6% yield, in line with average, implies a $74 valuation. The April 1-2 analyst event should be a positive catalyst as we expect more details on the new facilities.” Emerge Energy Services LP closed on Friday at $53.25.