U.S. Silica (SLCA) Stock Upgraded at Jefferies

U.S. Silica’s (SLCA) stock rating was raised to ‘buy’ from ‘hold’ at Jefferies.
By Kaya Yurieff ,

NEW YORK (TheStreet) -- U.S. Silica (SLCA) - Get Report stock rating was boosted to "buy" from "hold" at Jefferies. The firm also lifted its price target to $41 from $24.

The Frederick, MD-based company is a domestic producer of specialized mineral silica.

"We believe U.S. completions demand growth through the recovery is likely to be powerful and is not fully reflected in shares," Jefferies wrote in an analyst note.

Additionally, the company is poised to benefit from sand demand growth expected over the next several years, according to the firm.

"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," Jefferies said.

The firm also introduced a blended method for setting its price targets.

"Our DCF models incorporate stronger recovery and some higher mormalized estimates. But multiples (and we generally use prior cycle peaks) allow for some of our PTs to reflect past market enthusiasm about earnings upside potential," Jefferies said.

One of the biggest beneficiaries of the firm incorporating multiples for its price target is U.S. Silica.

Shares of U.S. Silica closed higher by 0.14% to $34.90 on Monday.

Separately, TheStreet Ratings Team has a "Hold" rating with a score of C on the stock.

The primary factors that have impacted the rating are mixed. The company's strengths can be seen in multiple areas, such as its solid stock price performance and largely solid financial position with reasonable debt levels by most measures.

But the team also finds weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity.

Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.

You can view the full analysis from the report here: SLCA

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