Baird Increasingly Constructive On Earthstone Energy

In a report issued Wednesday, Baird reiterated a Neural rating and $11 price target on small-cap Earthstone Energy Inc ESTE, which recently restarted completions in the second half of the year. This move allows the management team to go back to “the growth that sits as a cornerstone to any investment thesis on this small-cap stock."

In fact, analysts at Baird feel “encouraged by this more forward-leaning posturing." While they are still looking for further information regarding the state of the company’s Permian growth endeavor and efficiency improvements at the wellhead in the Eagle Ford shale before becoming more constructive on the shares, the experts updated their model to account for the Lynden acquisition closed in May.

Estimates were also updated to better reflect the recent change in guidance that management provided, “the company’s related secondary pricing announcement, and refreshed hedge disclosure.”

Baird now expects full year output of 4.6 Mboe/d, close to the midpoint of management’s guidance, and 2017 output of 5.6 Mboe/d.

The analysts noted the additional targeted expansion in the Permian Basin seems encouraging, while the $80 million in available liquidity expected by the end of the second quarter provides plenty of room for progress.