Cantor Fitzgerald Remains Bullish On Earthstone Despite Shares Falling After Offering

Shares of Earthstone Energy Inc ESTE rebounded Friday after plunging 13 percent Thursday following the pricing of its share offering. However, Cantor Fitzgerald reiterated its Buy rating on the shares, citing a healthy balance sheet.

"We reiterate our BUY rating on ESTE as we have a positive view on the company's relatively healthy balance sheet (we are modeling YE:17 net leverage at 0.5x), which in our view should provide operational flexibility and enhances management's ability to execute on longer term acquisition ambitions," analyst Brad Carpenter wrote in a note.

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Carpenter noted that the increased float after the follow-on offering is a longer-term positive.

Earthstone priced 4.5 million shares at $10.50 a share, a 12.3 percent discount to where the stock closed on Wednesday. The offering increases share count by roughly 30 percent. Proceeds of $44.7 million will primarily be used to pay down debt.

The analyst also cut his 2016/2017 CFPS estimate to $0.93/$1.85 from $1.11/$2.38. The analyst also updated his 2016/2017 EPS forecast to ($0.39)/$0.09 from ($0.43)/$0.10.

Carpenter also cut his price target to $16 from $19.

At the time of writing, shares of Earthstone rose 2.24 percent to $10.48.