Wunderlich Raises CWEI Target Price
Clayton Williams Energy, Inc. (CWEI) reported strong 3Q10 results that beat
our $1.03 EPS estimate (and the Street's $0.99) handily. The company reported
adjusted EPS of $1.28, driven by higher-than-expected production and lower
operating costs during the quarter. We believe these trends should continue as
Clayton Williams focuses on drilling developmental oil wells in the Permian
and Austin Chalk. Additionally the company added nice oil hedges for 2011
and 2012 at over $80/bbl. Based on the higher production, lower costs, and
higher realized price expectations, we are raising our price target to $85 per
share from $70 and maintaining our Buy rating.
