Imperial Capital Raises Price Target on Comstock Resources (CRK) Following Reverse Stock Split
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Imperial Capital reiterated an In-Line rating on Comstock Resources (NYSE: CRK), and raised the price target to $3.75 (from $0.75), following the company's 1-for-5 reverse stock split.
Analyst Kim Pacanovsky commented, "We are maintaining our In-Line rating on CRK shares and are adjusting our one-year price target to $3.75 from $0.75 (reflecting the 1-for-5 reverse stock split), about 5% below the recent share price. CRK continues to produce excellent operational results in the Haynesville/Bossier shale with stellar IRRs, but we believe that the use of hedges to secure these strong returns would ensure a baseline level of cash flow and provide greater comfort to investors. We believe the 1-for-5 reverse stock split and 2nd lien secured debt for equity tender offer, announced by the company on 8/1/16, are needed steps in providing CRK with the opportunity to recover from its historical reticence from issuing equity (which led to it using a debt-only model for growth) and reticence to hedging. With liquidity of $117mn and the return of a one-rig program in October 2016, we still await a significant liquidity raising event before becoming more positive on the shares."
Shares of Comstock Resources closed at $3.94 yesterday.
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