Basic Energy Services Stock Trading at ‘Significant’ Discount


Investment bank Raymond James recently announced that it was reiterating its Strong Buy rating for service provider Basic Energy Services (BAS:NYSE) and changing the company's target price to C$30.00.

Basic recorded a gain of C$0.66 per share during the third quarter, which matched the estimates of Wall Street analysts but fell short of the Raymond James estimate of C$0.76. The services provider reported that sustained demand for natural gas liquids and oil as well as successful integration of acquisitions contributed to a 17 percent increase in revenue from the last quarter.

After plunging 55 percent since July, Basic's stock trades at a 3.1 times multiple of EV/EBITDA, which is a significant discount to the average multiple of 5.2 times for its peers. The investment bank's new target price for the stock is the result of various valuation models including analysis of DCF, EBITDA and P/E.

Basic Energy Services, Inc. closed at C$16.77 on October 24 and hit a 52-week high/low of C$37.79 and C$10.41, respectively.