Analyst Actions: Penn Virginia Corp Coverage Reinstated with Neutral Rating, TP of $6 at Credit Suisse


Credit Suisse has reinstated oil and gas company Penn Virginia Corp. ( PVA ) with a neutral rating and a price target of $6 a share. PVA shares are down 0.63% in afternoon trading to $4.70.

The analysts said that PVA's recent offering of 8 million common shares and a $115 million convert represent dilution of 60% leave the company "in a much better financial position to drive growth in the Eagle Ford. We project the company will have $40 million in cash and an untapped $300 million borrowing base at year-end 2012."

Credit Suisse also expects PVA to exit 2012 with net debt-to-cap at 36% and net debt 2.6x annualized 4Q12 EBITDA vs. 48% and 3.2x at the end of 2Q12, respectively.

However, there are some inventory concerns that kept the Analyst's rating no higher than neutral. "PVA did not address the second major concern that keeps us Neutral on the stock: project inventory," said Credit Suisse in a report.

Valuation. PVA is trading at a 20% discount to our 'PD-Plus' NAV at the Credit Suisse price deck right in line with the peer group. On multiples, PVA is trading 4.0x and 3.7x 2012 and 2013 EBITDA (hedged at the futures strip) vs. 6.4x and 4.5x for its peers, respectively.

Shares of PVA are trading within a 52-week range of $3.92 - $7.74.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

Copyright (C) 2014 All rights reserved. Unauthorized reproduction is strictly prohibited.

This article appears in: Investing , Commodities

Referenced Stocks: PVA

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