Jefferies Upgrades U.S. Silica Holdings (SLCA) to Buy

Jefferies upgraded U.S. Silica Holdings (NYSE: SLCA) from Hold to Buy with a price target of $41.00 (from $25.00).

Analyst Brad Handler commented, " SLCA is poised to benefit from sand demand growth expected over the next several years — we assume sand demand in 2020 is 60% higher than the peak rate set at the end of 2014, a function of (1) our view that the number of completion stages will be 40% above that prior cycle peak rate and (2) continued sand intensity per stage growth (see page 17 for further discussion on frac sand demand). SLCA has one of the largest combined production and distribution networks in the industry, including from its largest relative exposure to Brown/regional sands. We note that we now model that SLCA adds two greenfield mines in addition to its Fairchild, WI facility and Pacific, MO expansion, with the first additional greenfield plant starting by the end of 2018.

It is this sand demand growth, and SLCA participating in supplying it, which gives us the confidence to buy shares today, despite the strong recovery in share prices experienced YTD."

For an analyst ratings summary and ratings history on U.S. Silica Holdings click here. For more ratings news on U.S. Silica Holdings click here.

Shares of U.S. Silica Holdings closed at $34.87 yesterday.

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