Bruce Jefferson
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Pioneer Energy Offers Attractive Value, Jefferies Upgrades

Jefferies has upgraded Pioneer Energy Services Corp to Buy from Hold, saying the 24 percent decline in stock price from its early June peak offers attractive value, while production services could aid upside.

"We are not overly concerned with covenant risk given our outlook as we look for Production Services and in particular PES's industry-leading well-service fleet to drive recovery and to offset lower Drilling Services contribution," analyst Brad Handler wrote in a note.

Further, Handler noted that asset sales and potential equity issuance can help meet leverage and coverage ratios if needed in the second half of 2017.

Meanwhile, the brokerage added that Pioneer Energy's well-servicing fleet of 125 tall-mast rigs is well suited for both production and completion work in unconventional wells, particularly with longer lateral horizontals.

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