FBR Capital Raises Price Target on Earthstone Energy (ESTE) Following Analysis of Bold Energy Combination
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FBR Capital reiterated an Outperform rating on Earthstone Energy (NYSE: ESTE), and raised the price target to $17.00 (from $14.00), following an analysis of the company's combination with Bold Energy III LLC. The combination is a strategic transaction that establishes a significant operated position in the Midland Basin. Bold investors will effectively receive 36.1 million shares, representing 61% of the combined company, with ESTE stockholders retaining a 39% stake.
Analyst Chad Mabry commented, "We are raising our price target on ESTE to $17 (from $14) following our deeper dive into the company’s strategic combination with Bold Energy. We were initially positive on the transaction—refer to our prior note, "Bold Move: Positive Initial Read on Transformative Acquisition; Reiterate Outperform"—which we felt delivered on investor expectations of expanding Earthstone’s operated position in the Midland Basin. Further updates to our financial model following an investor call on November 9 indicate that the deal is indeed accretive to our NAV. We reiterate our Outperform rating as we believe the pro forma portfolio offers a much more attractive platform for future growth."
Shares of Earthstone Energy closed at $11.94 yesterday.
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