B.Riley FBR Thinks Lonestar Resources US’s Stock is Going to Recover


B.Riley FBR analyst Rehan Rashid reiterated a Buy rating on Lonestar Resources US (LONE) yesterday and set a price target of $7.75. The company’s shares closed yesterday at $3.46, close to its 52-week low of $3.

Rashid commented:

“Despite similar commodity prices and improving company-specific growth profile, LONE shares currently trade 70% below its October 2018 high. We believe that meaningful discount to fundamental outlook and intrinsic value is not justified. In our opinion, as production growth and cash flows reaccelerate in 2H19, public market equity value should recouple with fundamental outlook. Therefore, we are reiterating our Buy rating and 12-month $7.75/share price target. Our price target is based on the stock trading at 60% of its NAV and 4.1x 2020 EBITDA. We believe that today’s stock selloff is largely driven by GAAP reporting driven reported headline earnings loss (zero effect on future economic/intrinsic value of company) of $2.45/share and not helped by a tough macro tape. This, to us, provides a unique opportunity to accumulate shares at significant discount to intrinsic value.”

According to TipRanks.com, Rashid is ranked 0 out of 5 stars with an average return of -9.9% and a 37.5% success rate. Rashid covers the Basic Materials sector, focusing on stocks such as Gulfport Energy Corp, Range Resources Corp, and Southwestern Energy.

The word on The Street in general, suggests a Moderate Buy analyst consensus rating for Lonestar Resources US with a $6 average price target, representing a 73.4% upside. In a report released today, Northland Securities also maintained a Buy rating on the stock with a $6 price target.

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Based on Lonestar Resources US’s latest earnings release for the quarter ending March 31, the company reported a quarterly GAAP net loss of $58.56 million. In comparison, last year the company had a GAAP net loss of $16.54 million.

Based on the recent corporate insider activity of 23 insiders, corporate insider sentiment is positive on the stock. This means that over the past quarter there has been an increase of insiders buying their shares of LONE in relation to earlier this year.

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Lonestar Resources US, Inc. is engaged in the acquisition, development, and production of unconventional oil and natural gas properties. Its portfolio includes the Eagle Ford Shale. The company was founded by Charles William Stocker on December 2015 and is headquartered in Fort Worth, TX.

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