On Monday, Citi updated its stance on Atlas (NYSE:ATCO) Energy Solutions Inc (NYSE:AESI), reducing the price target to $25 from the previous $26, while still recommending the stock as a Buy. The firm anticipates a challenging second quarter for the company due to ongoing issues from a fire at its Kermit facility. The aftermath of the incident is expected to affect the upcoming earnings report, with a return to more stable operations projected for the third quarter.
Atlas Energy Solutions is navigating through the aftereffects of operational disruptions. The impact is likely to be reflected in its second-quarter earnings, with Citi's adjusted EBITDA estimate now at approximately $74 million, slightly below the consensus of $78 million. The firm also suggests that while earnings are expected to improve in the latter half of the year, the increase may not meet consensus expectations.
Citi projects a third-quarter adjusted EBITDA of $103 million, which is 5% lower than the market consensus, and a fourth-quarter EBITDA of $115 million, 4% below consensus. These revised estimates have led to a decrease in the full-year 2024 adjusted EBITDA forecast to $364 million, compared to the consensus of $383 million, and a reduction in the 2025 estimate to $566 million from the consensus of $630 million.
The decision to lower the price target to $25 is based on the reduced EBITDA forecasts. Despite the downward revision, Citi maintains a Buy rating on Atlas Energy Solutions, citing the free cash flow potential of the business following the start-up of the Dune Express. The firm's outlook remains positive on the stock's future performance, emphasizing the expected cash generation capabilities post-recovery.
In other recent news, Atlas Energy Solutions showcased a robust Q1 2024 performance, with total sales reaching $193 million, adjusted EBITDA at $76 million, and net income at $27 million. Even a fire at their Kermit facility had minimal impact on production, with full restoration expected soon. The company also integrated Hi-Crush post-acquisition successfully, maintaining its market leadership with 28 Last Mile crews.
Further, Atlas Energy Solutions announced a 5% dividend increase to $0.22 per share, reflecting confidence in its financial strength. The Dune Express construction is on track, with expected cost savings and the commissioning process to start in Q4.
In another development, Piper Sandler revised Atlas Energy Solutions' stock price target to $25.00, down from the previous $29.00, but maintained its Overweight rating on the company's shares. This adjustment is based on updated financial estimates, including an anticipated EBITDA of $748 million and net debt of $411 million by the second quarter of 2024.
Lastly, Atlas Energy Solutions announced the appointment of Brian McConn as Executive Vice President of Sales and Marketing. With over a decade of experience in the industry, McConn is expected to enhance Atlas's commercial strategy and market presence. These are the latest developments for Atlas Energy Solutions.
InvestingPro Insights
Atlas Energy Solutions Inc (NYSE:AESI) appears poised for a rebound, according to the latest metrics and analysis from InvestingPro. With a current market capitalization of $2.19 billion and a P/E ratio of 11.31, the company shows signs of being undervalued compared to the adjusted P/E ratio of 17.32 for the last twelve months as of Q1 2024. The company's revenue growth has been robust, with a 13.35% increase over the last twelve months and an even more impressive quarterly growth of 25.58% in Q1 2024.
InvestingPro Tips highlight that analysts are expecting sales growth in the current year, and although the stock has seen a decline over the last month, its liquid assets surpass short-term obligations, indicating financial resilience. Additionally, the company operates with a moderate level of debt and is predicted to be profitable this year, having been profitable over the last twelve months.
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