Tuesday, Stifel analysts have maintained their Buy rating and $13.00 price target on Patterson-UTI Energy (NASDAQ:PTEN), following the company's latest business update. In their remarks, Stifel noted that Patterson-UTI operated 105 U.S. land rigs in the fourth quarter of 2024, which was slightly below their estimate of 106 rigs.
Looking ahead to the first quarter of 2025, the company expects activity levels to remain relatively unchanged, aligning with Stifel's current forecasts. With a beta of 2.1, investors should note that PTEN's stock tends to show higher volatility than the broader market. Get access to 8 more key insights about PTEN with an InvestingPro subscription.
Patterson-UTI Energy's management has indicated a potential shift in activity towards gas-rich basins as 2025 progresses. They also anticipate a rebound in completion activity as the company moves out of a seasonally weaker fourth quarter.
From the perspective of hydraulic fracturing fleet composition, Patterson-UTI is planning to increase its deployed electric horsepower (HHP) to over 200,000 HHP from the current level of approximately 150,000 HHP. Moreover, about 80% of the company's HHP is now capable of being powered by natural gas.
The company also highlighted its commitment to shareholder returns, with an expectation to continue delivering robust cash returns. This commitment is supported by a forecasted reduction in capital spending year over year in 2025, and a target to return at least 50% of free cash flow to shareholders through stock buybacks and dividends.
The company has maintained dividend payments for 21 consecutive years, currently offering a 3.71% dividend yield, while management has been actively buying back shares.
Stifel's analysis suggests that the business update from Patterson-UTI Energy should have a neutral impact on the company's stock. The firm's reiteration of the Buy rating and price target reflects their ongoing positive outlook on the stock. For a comprehensive analysis of PTEN's valuation and growth prospects, access the detailed Pro Research Report available exclusively on InvestingPro.
In other recent news, Patterson-UTI Energy Inc. has been experiencing significant developments. Goldman Sachs upgraded the company's shares from a Neutral to a Buy rating, acknowledging the company's resilience in North American activity.
The firm also set a new price target of $10.00 for the shares. Despite a challenging third quarter in 2024, with a net loss of $979 million due to an $885 million goodwill impairment related to the NexTier merger, Patterson-UTI maintained steady revenue of $1,357 million and generated substantial free cash flow. The adjusted net income was reported at $2 million, with adjusted EBITDA reaching $275 million.
The company's fourth quarter adjusted EBITDA guidance, as noted by CapitalOne, reflects a cautious outlook. Patterson-UTI Energy's Completion Services segment aims to achieve margins similar to those seen in mid-2024. The company also anticipates a stable rig count for 2025, despite expecting slightly lower activity levels compared to 2024.
These recent developments underscore Patterson-UTI's focus on leveraging its integrated services model and strong cash flow to enhance shareholder value amid market challenges. The company has maintained dividend payments for 21 consecutive years, currently offering a 3.9% dividend yield. Patterson-UTI Energy does not undertake any obligation to update forward-looking statements publicly.
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