Rodman & Renshaw Starts Abraxas Petroleum (AXAS) at Buy
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Rodman & Renshaw initiated coverage on Abraxas Petroleum (NASDAQ: AXAS) with a Buy rating and a price target of $3. Analyst Noel Parks thinks Austin Chalk and Wolfcamp testing represent potential catalysts.
"We are initiating coverage of Abraxas with a Buy rating and a $3.00 per share price target, based on our risk-weighted net asset valuation model. (See Exhibit 10.) AXAS's current price is not much above our NAV for the company's proved reserves alone (which is $1.32 per share), essentially giving investors the Austin Chalk and Delaware Basin upside for free. Though AXAS is up a robust 69% YTD, far exceeding the +10% change in the S&P 500, it lags the 94% rise of its multi-play peers and trades at a pronounced CF discount to them at 4.7x 2017 EV/CF vs. 10.7x for the group. We believe that solid and repeatable results in either of the new plays could close the gap with peers in short order, potentially proving our price target conservative," said Parks.
Shares of Abraxas Petroleum closed at $1.79 yesterday.
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