Imperial Capital Raises Price Target on Comstock Resources (CRK) to $8.50; Reiterates In-Line
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Imperial Capital reiterated an In-Line rating on Comstock Resources (NYSE: CRK), and raised the price target to $8.50 (from $3.75), reflecting a 1-for-5 reverse stock split in August. Imperial adjusted EPS estimates to ($12.37) from ($13.41). However, before Imperial would become more positive on the shares, analysts await early results from the restarted program, shareholder approval of the shares needed for conversion of the second lien debt, and the initiation of natural gas hedges that shows that management is willing to lock in a base amount of cash flow.
Analyst Kim Pacanovsky commented, "We are maintaining our In-Line rating on CRK shares and are adjusting our one-year price target to $8.50 from $3.75 (reflecting the 1-for-5 reverse stock split in August 2016), about 10% above the recent share price. CRK’s 1-for-5 reverse stock split and debt exchanges have given the company some breathing room as it returns the drillbit to action. With liquidity of $117mn and the return of a one-rig program occurring presently (with a second rig to immediately follow), we believe the company will see rapid production increases. We preliminarily expect 2017 production of just under 191mmcf/d, and note the company is preliminarily guiding to 207-229mmcf/d. Our more conservative estimate results in 39% year-over-year (yoy) gas production growth, along with an increase of $63mn in 2017 EBITDA vs our previous estimate."
Shares of Comstock Resources closed at $7.70 yesterday.
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