Jefferies Downgrades U.S. Silica Holdings (SLCA) to Underperform

Jefferies downgraded U.S. Silica Holdings (NYSE: SLCA) from Hold to Underperform and cut their price target to $14.00 on pricing concerns.

Analyst Brad Handler commented, "We downgrade SLCA to Underperform with a new PT of $14. Our downgrade is based on a combination of near term and longer term concerns for the sand industry. Nearer term, we think there is greater downside risk to pricing and thus margins than is generally believed, as we discussed above. Longer term, our less optimistic outlook—our new normalized raw frac sand contribution margin is now $13 vs $21 previously—stems from the concerns: (1) relatively low cost supply, including from expansions of existing mines, can be readily accessed by several of the competitors, (2) the economic returns even at mid-teens $/ton contribution margin support such expansion, (3) we are uncertain how much true attrition there is in supply if pricing supports restarting of idled plants."

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 $19.15 yesterday.

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