Seaport Global Securities Starts Resolute Energy (REN) at Buy
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Seaport Global Securities initiates coverage on Resolute Energy (NYSE: REN) with a Buy rating and a price target of $45.00.
Analyst Mike Kelly commented, "We are initiating coverage of REN with a Buy rating and $45 NAV-based price target. We believe REN is poised to deliver top-tier debt-adjusted production growth (30% CAGR through 2020E) with an improving capital efficiency profile as the company shifts activity to the Delaware Basin. We think this will be visible as early as FY17, as we see production 39% higher than consensus estimates. And despite significant equity appreciation over the last few months (>790% since early July), REN continues to trade at a significant discount to its Permian peers at 6.2x EV/FY17E EBITDA vs. the Delaware median valuation at 13.1x; at ~$27K/acre, REN also screens cheap vs. the potential Silver Hill acquisition, which is expected to garner >$40K/acre. Furthermore, we see significant NAV upside associated with our current inventory assumptions of ~250 gross locations on two Wolfcamp benches on 120-acre spacing."
Shares of Resolute Energy closed at $25.68 yesterday.
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