Pritchard Capital Discusses Basic Energy Services

Pritchard Capital is out with a research report on Basic Energy Services, Inc BAS after it reported earnings. It has a Buy rating and a $45 price target on shares. In a note to clients, Pritchard Capital writes, "Our focus on BAS's 2Q results is on the operating divisions. Well Servicing revenue reached $83.9MM vs. our estimate of $82.3MM. Revenue per rig hour matched our $376 estimate. Fluid Services revenue of $81.4MM slightly lagged our estimate of $83.0MM. Gross margin climbed to 36.5% vs. our 35.7% projection. Completion and Remedial Services top line of $121.8MM cleared our estimate of $113.1MM, though gross margin of 43.5% was just under our 43.9% view. Contract Drilling results lagged our projection on both top and gross profit lines. That fundamental strength across the three large segments is partially obscured by G&A (inflated in part by acquisition-related expenses) and Interest (where we did not fully incorporate the impact of the recent debt financings). EBITDA (the basis of our target) of $77.4MM came in just higher than our $76.9MM estimate. Distilling through the results below total gross profit yielded EPS of 46c, vs. our 48c. We think investors should focus on the segment results, which are more indicative of end demand and market conditions in the field. As for liquidity, subsequent to quarter-end BAS received its long-anticipated federal income tax refund totaling $80mm. In light of the more-or-less in-line EBITDA performance, we anticipate fine tuning (and no material changes) to our estimates and $45 target after the earnings conference call this morning. Reiterate 'Buy'." Shares of BAS lost 17 cents yesterday to close at $36.84, a gain of 0.46%.