KLR Group Downgrades Unit Corp. (UNT) to Hold

November 21, 2016 7:24 AM EST
Get Alerts UNT Hot Sheet
Price: $26.56 -3.94%

Rating Summary:
    9 Buy, 3 Hold, 1 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 1 | Down: 2 | New: 3
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KLR Group downgraded Unit Corp. (NYSE: UNT) from Accumulate to Hold with and maintained a $20 price target.

Analyst John Gerdes commented, "We are downgrading UNT from Accumulate to Hold. Our UNT target price is unchanged at $20 per share. Unit’s mid-cycle E&P capital yield is ~95% versus the industry median cash recycle ratio of ~135%. UNT has appreciated ~20% in past month and now approximates our target price thus requiring a downgrade to Hold.

Our ’16 production decline expectation of ~14% is in the upper half of company guidance (13%-16%). average rig fleet utilization should decrease to ~19%, while average dayrates decline ~$1,370 to ~$17,985/day (~25% drilling margin). The company has nine rigs under long-term contract (six months to two years). One contract is up for renewal in 4Q/16, seven contacts in ’17 and one contract in ’18. All eight BOSS rigs are under contract with third parties. Unit is constructing a ninth BOSS rig with plans to deliver the rig to a Permian Basin operator in early ’17."

For an analyst ratings summary and ratings history on Unit Corp. click here. For more ratings news on Unit Corp. click here.

Shares of Unit Corp. closed at $21.04 yesterday.

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