Seeking Alpha

RSP Permian -2.5% as UBS downgrades on valuation

  • RSP Permian (RSPP -2.5%) is downgraded to Neutral from Buy at UBS, citing the 57% rally since the January IPO even while raising its price target for the stock to $34 from $30.
  • UBS says RSPP offers compelling long-term production growth and resource expansion potential, but it is looking for more operated data and a longer execution track record.
  • RSPP's first Lower Spraberry and Wolfcamp B wells should come online in Q3, but early industry results have been lackluster, UBS says, while potential accretive acquisitions in the Permian Basin could compress valuation and enable RSPP to gain critical mass to maximize efficiency gain, boosting NAV.
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