Parsley Energy (PE)

[dan_s]

In the last 3 months, 8 ranked analysts set 12-month price targets for PE. The average price target among the analysts is $35.25. Price targets range from $32 to $38.

PE closed at $29.44 on Friday, December 29.

Parsley has provided some production guidance for 2018. I have updated my forecast/valuation model and it will be posted to the EPG website late today.
My valuation goes up $4 to $45.

This mid-cap is going to report some impressive growth and solid earnings quarter-after-quarter if oil prices stay above $50/bbl. For each dollar WTI goes over $50, my valuation goes up $1/share.

Things to remember about Parsley Energy:
> It is a pure play on the Permian Basin.
> It is quite similar to FANG, but growing production faster.
> Production growth will be more than 75% YOY in 2017. My valuation is based on production growth of ONLY 50% YOY in 2018.
> There are few upstream companies with this much near-term growth potential.
> Cash Flow From Operations s/b near $1 Billion in 2018, which should fund all of their drilling & completion capex
> As Wall Street gains more confidence in the price of oil, this is exactly the kind of company they will be looking for.

Take a look at row 65 on my forecast model and see how it compares to First Call's revenue forecasts by quarter.

PE is one of my Top Picks for 2018.