Why U.S. Silica Holdings Inc Slipped This Morning

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While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a look at particularly stock-shaking analyst upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of U.S. Silica Holdings Inc (NYSE: SLCA  ) fell 3% this morning after Jefferies downgraded the silica miner from buy to hold.

So what: Along with the downgrade, analyst Brad Handler lowered his price target to $31 (from $41), representing about 13% worth of upside to yesterday's close. While value investors might be attracted to the stock's sluggish action in recent months, Handler thinks U.S. Silica's appreciation potential remains limited given its seemingly disappointing execution of late.

Now what: Jefferies lowered its 2014 EPS estimate for U.S. Silica from $2.35 to $1.85, and its 2015 view from $3.00 to $2.30. "It disappoints us to conclude that frac sand demand potential cannot offset execution concerns," noted Handler. "Acknowledging that guidance was intended to be conservative, we find troubling: (1) lack of progress in managing logistics costs, (2) implied lower-than-expected volumes of higher-grade sand and (3) apparent lack of competitive advantage."

When you couple those seemingly real risks with U.S. Silica's hefty debt load, it's tough to disagree with Jefferies' cautious stance. 

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Comments from our Foolish Readers

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  • Report this Comment On February 04, 2014, at 10:37 AM, russellmmichael wrote:


  • Report this Comment On February 08, 2014, at 5:17 PM, ynotrchick wrote:

    I hate slca, its been worthless, the worse stock i ever bought, only good for kitty litter, hope they go out of business, very poor company.

  • Report this Comment On February 08, 2014, at 6:02 PM, ynotrchick wrote:

    What can you believe, just a few months ago i read how slca was ranked like 4th in the forbes top 100 small companies, was to be a good stock, now after i buy this junk stock its about worthless, and now i read about how much dept they have, how can it be both ways, a top forbes company, but stock thats dropped like a rock and have alot of dept, who writes this stuff because it really upsets me, i never ever would have bought this worthless company if forbes hadn't ranked it so high, i thought since forbes ranked it so well it must be a good stock, was i ever wrong, worst stock i ever bought, i hope they all go on welfare, worthless company.

  • Report this Comment On February 13, 2014, at 6:16 PM, basehorhonda wrote:

    I dont know what you guys are talking about. I purchase this stock after the gap down a week or so ago, and it has done nothing but go up. Dont be angry for not selling when stocks hit the supply zone.

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DocumentId: 2822498, ~/Articles/ArticleHandler.aspx, 9/1/2015 10:27:44 PM

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Brian Pacampara

I take a look at big 10% moves, as well as stock-shaking analyst calls, on a daily basis for The Fool. While I don't believe in active trading, closely monitoring Mr. Market's mood swings can help identify long-term opportunities.

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Related Tickers

9/1/2015 4:03 PM
SLCA $19.50 Down -0.60 -2.99%
U.S. Silica Holdin… CAPS Rating: ****