Analysts Leo Mariani and Steven Dechert said the Denver company's valuation makes it attractive as the stock has declined 5% year to date. The shares were up 5.5% to $22.53 on Wednesday.
KeyBanc notes that Bonanza Creek trades "well below small-cap peers" with its 2020 enterprise value to debt adjusted cash flow multiple of 2.2 times. The balance sheet is "solid," they said.
The negatives are limited trading volumes, regulatory concerns and cash-flow outspend, they said.
New Colorado regulations shouldn't burden the company's operations much, the analysts wrote.
They said they expected BCEI "to outspend cash flow by $97 million in 2020 at $56 West Texas Intermediate, which is slightly less favorable vs. peers."
Among the risks that could impede Bonanza's ascent are weakening oil prices.
"This would impair BCEI's returns on its drilling inventory and put some modest strain on the company's balance sheet. BCEI's current leverage is well below its peers and its financial liquidity is reasonable," Mariani and Dechert said.