B.Riley FBR Gives a Hold Rating to Fairmount Santrol

By Jason Carr

B.Riley FBR analyst Lucas Pipes assigned a Hold rating to Fairmount Santrol (NYSE: FMSA) today and set a price target of $5.50. The company’s shares opened today at $4.70.

Pipes noted:

“We are initiating coverage of Fairmount Santrol Holdings, Inc. with a Neutral rating and a 12-month price target of $5.50 per share. Fairmount produces frac sand and industrial and recreational (I&R) sand, with 15.6M tons of frac sand capacity and 3.5M tons of I&R capacity. The company has seven operational frac sand mines located in Illinois, Texas, Wisconsin, and Missouri. In addition to mining raw frac sand, Fairmount is one of the largest producers of resin- coated proppants in the industry. We believe Fairmount’s diversification by (1) end market, (2) geography, and (3) grade mix will keep it competitive among frac sand producers, but the company has an onerous debt burden and is playing risky catch-up in the industry’s race to build in the Permian Basin, keeping us on the sidelines.”

According to TipRanks.com, Pipes is a 3-star analyst with an average return of 3.5% and a 51.9% success rate. Pipes covers the Basic Materials sector, focusing on stocks such as Peabody Energy Corporation Comm, Newmont Mining Corporation, and Stillwater Mining Company.

Fairmount Santrol has an analyst consensus of Moderate Buy, with a price target consensus of $5.43.

Based on Fairmount Santrol’s latest earnings report for the quarter ending September 30, the company posted quarterly revenue of $280 million and quarterly net profit of $34.94 million. In comparison, last year the company earned revenue of $135 million and had a GAAP net loss of $20.63 million.

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Fairmount Santrol Holdings, Inc. engages in the provision and supply of proppants and sand products. It operates through the Proppant Solutions; and Industrial and Recreational Products business segments. The Proppant Solutions segment provides raw and coated proppants primarily for use in hydraulic fracturing.