Basic Energy shares fall on analysts' forecasts

Shares of Basic Energy Services Inc. fell in trading Thursday after two Jefferies analysts lowered their earnings forecasts for the oil and gas well service company.

THE SPARK: Analysts Brad Handler and Eduardo Royes lowered their estimates for the company's fourth quarter and 2013 fiscal year, saying they expect weaker top-line results across all of its business segments. They pointed to pricing pressure and activity in key drilling regions as the company's most pressing issues. While the analysts expect a recovery down the road, they said they prefer larger companies with better free cash flow right now.

THE BIG PICTURE: Basic Energy, based in Midland, Texas, provides well site services to oil and natural gas drilling and producing companies in the U.S. It recently completed a $43 million acquisition of five salt-water disposal plants in North Dakota's Bakken Shale.

THE ANALYSIS: The analysts said the recent acquisition should improve the company's fluid services margins and benefit the company's profit. However, this is only one component of its business.

The analysts dramatically lowered their fourth-quarter forecast, saying they now expect a loss of 14 cents per share, versus a prior forecast for a 1-cent per share loss. Analysts polled by FactSet, on average, expect the company to post a loss of 18 cents per share for the quarter.

Handler and Royes also said they expect the company to post a loss of 10 cents per share for 2013, down from a previous forecast for earnings of 40 cents per share. Analysts, on average, forecast earnings of 2 cents per share for the company in 2013.

SHARE ACTION: Shares fell 44 cents, or 3.8 percent, to close at $11.07. They have lost nearly 44 percent of their value this year.