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Cormark Securities Maintains Recommendation of Top Pick for Pure Energy Services

Toronto-based Cormark Securities reaffirmed its Top Pick recommendation for Pure Energy Services (PSV:TSX) and increased its target price for the company's stock to $14.00 from $13.00. This price is based on a target multiple of 5.5x EV/EBIDTA. The company's stock closed at $7.40 on August 12. Cormark expects significant improvement in Pure Energy Services' financial results due to predicted increases in activity and the addition of more capital equipment. The company's stock held a low value of $2.85 over the last 52 weeks and a high value of $8.60.

The 2Q results released on August 15 were mostly aligned with Cormark's expectations. EBITDA was $0.9 MM, which was less than the predicted EBITDA of $1.3 MM. Higher prices contributed to stronger revenue in both the United States and Canada. Strong frac flowback activity contributed to positive results in the United States, while weather conditions hampered utilization in the Canadian Division, which resulted in lower-than-expected revenue.

Cormark states that Pure Energy Services is the best value of the stocks belonging to the oilfield services group, trading at 2.9x Cormark's predicted 2012 EBITDA. The other stocks in the group are averaging 4.3x predicted EBITDA.  



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