Nuverra Environmental (NES -6.6%) extends yesterday's losses sparked by a negative post on Seeking Alpha, which said "a liquidity crisis is looming" and shares could fall 80% over the next year.
Jefferies analyst Scott Graham is out defending NES, disputing claims that the company has a high probability of bankruptcy and saying the article ignores data on financial ratios "as seen by the banks."
Graham also points out that Dick Heckmann has not jumped ship and remains chairman with significant ownership.
The analyst is not positive on the stock, however, maintaining a Hold rating and cutting his price target to $2.75 from $3.25.
Nuverra Environmental Systems (NES) -20.9% premarket after a Seeking Alpha post by MBAvalueinvestor says shares could lose 80% over the next year.
NES is "a destroyer of capital," constantly posting disappointing results and overstating guidance, and its power fuels and core businesses are in decline, the article says.
A "liquidity crisis is looming": NES has $551M of debt and borrowing capacity has been restricted on its credit facility, it has cut spending but is still set to violate its credit facility covenants by year-end.
It's not surprising Q3 guidance in the water and renewable-energy sector was relatively subdued given mixed economic data and continuation of delayed orders for big projects, says Wedbush, however ...
Only Tetra Tach ((TTEK) showed ill-effect from the sequestration and instead there are encouraging signs out of municipalities.
Xylem (XYL) and Watts Water (WTS) said Europe had been worse than expected, but saw recent stabilization. While several noted weakness in China, A.O. Smith (AOS) bucked the trend with a 30% increase in sales there.
Wedbush's favorites are low-risk, high performers like Pentair (PTR), Franklin Electric (FELE), and Valmont Industries (VMI). Valmont is a controversial name, but the team fells concerns over slowing irrigation business are baked into the stock and the valuation - particularly given the balance sheet and ROIC - is compelling.
Names to avoid are Nuverra Environmental (NES), Aegion (AEGN), and Energy Recovery (ERII) given disappointing quarters for the first two and an extremely overvalued ERII.
Nuverra Environmental Solutions (NES +6.7%) jumps after announcing an agreement with Halliburton (HAL -1.5%) wherein the two companies will work together to advance HAL's H2O Forward Service which allows customers to recycle waste water for use in well completions. (PR)
Heckmann (HEK) -6.5% premarket after Global Hunter downgrades shares to Sell and cuts its target price to $2.50 from $3.50 following Q1 misses on the top and bottom lines. The firm says it can't assign a premium multiple any longer to a company that has proven it is in a highly cyclical business with considerable threats.
Nuverra Environmental Solutions Inc formerly, Heckmann Corp provides environmental solutions to customers focused on the development and ongoing production of oil and natural gas from shale formations.