Parsley Energy Shares May Be Fully-Valued Following 2016 Run

Parsley Energy Inc PE has been on quite a run in 2016, but the stock may have finally run out of steam. Macquarie analyst Paul Grigel downgraded the stock from Neutral to Outperform.

According to Grigel, Parsley’s 98 percent run in 2016 now has the stock fully-valued.

“Our multiples based approach and our NAV based approach both directionally point to the high US$30 or US$40 level which leaves limited upside to the name,” Grigel explains.

Much of the stock’s 2016 run has been driven by its solid asset base and its timely bolt-on acquisitions. Grigel praises the company’s management for its track record of good decision-making and execution.

Jefferies recently upped its growth estimates for Parsley in 2017 and 2018, but even stronger-than-expected growth is likely already priced into the stock.

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Jefferies maintains a $0.13 2016 EPS target for Parsley, but has upped its 2017 EPS estimate from $0.56 to $0.59. Despite the downgrade, the firm has also increased its price target for the stock from $36 to $38.

For investors expecting a long-term rally in oil prices, Grigel sees Parsley as a well-capitalized Permian Basin pure-play with “quality acreage.”

For now, Grigel is simply “awaiting a more compelling entry point.”