UPDATE: Stifel Upgrades Legacy Reserves (LGCY) to Hold
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(Updated - October 26, 2016 9:33 AM EDT)
Stifel upgraded Legacy Reserves (NASDAQ: LGCY) from Sell to Hold with a price target of $1.75. Yesterday Legacy announced that it executed a $300 million second lien term loan credit agreement with GSO Capital Partners LP.
"We view the announced transaction as incrementally positive for the partnership. When we downgraded the units to Sell, our call was centered around a challenging fall redetermination. However, we view that risk as largely removed with new access to liquidity. Additionally, we anticipate the partnership’s previous disclosure that its hedge counterparties were reluctant to add incremental commodity hedges has been resolved given the requirement the partnership must hedge at least 75% of its PDP production through FY18," said analyst Brian J. Brungardt, Jr. "Accordingly, we are upgrading the partnership to Hold from Sell and establishing a $1.75 target price, which implies a EV/NTM Adj EBITDA multiple of 6.6x."
Shares of Legacy Reserves closed at $1.36 yesterday.
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