KLR Group Downgrades Sanchez Energy (SN) to Accumulate
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KLR Group downgraded Sanchez Energy (NYSE: SN) from Buy to Accumulate with a price target of $10. Analyst John Gerdes tied the downgrade to valuation.
"Sanchez’s share price has appreciated almost 50% since our mid-July upgrade, outperforming the sector by ~40%, and now reflects modest intrinsic upside thus requiring a downgrade to Accumulate. Sanchez’s mid-cycle (’18) capital yield is ~105% versus the industry median cash recycle ratio of ~130%. Our ’16 production expectation of ~55 Mboepd is ~6% above company guidance (48-52 Mboepd). Assuming a commodity price recovery, our economic model assumes Sanchez conducts a three-rig program in ’17 and four-rig program in ’18," said Gerdes.
Shares of Sanchez Energy closed at $9.17 yesterday.
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