On Friday, Citi reiterated its Buy rating on shares of Liberty Oilfield Services (NYSE:LBRT), maintaining a $32.00 price target. The firm's update to its model for LBRT follows a recent discussion with the company about market trends. While Citi keeps its second-quarter revenue forecast at $1.205 billion and EBITDA at $277 million, aligning with the consensus, it has slightly reduced its third-quarter revenue estimate by 1.5% to $1.226 billion. The EBITDA estimate for the same period has also been trimmed by 3% to $286 million, compared to the FactSet consensus of $298 million.
The adjustment to the third-quarter estimates comes as a result of balancing the expected seasonal recovery in the Rockies against a lower contribution margin from incremental sand sales. Despite these revisions, Citi's stance on Liberty Oilfield Services remains positive, noting that the elevated short interest on LBRT, which stands at 8%, may be due to investors anticipating an EBITDA cut.
However, the firm also highlighted growing enthusiasm around Liberty Power Innovations (LPI) and the company's potential expansion into non-oil and gas opportunities. According to Citi, there's a possibility that LBRT could sign a non-O&G contract during the second half of the year. Should this occur and expectations for LPI's EBITDA potential increase significantly, Citi believes that the resulting multiple uplift for LBRT's stock would outweigh the modest reduction in core EBITDA projections.
In other recent news, Liberty Oilfield Services has been the focus of several analyst upgrades and price target increases. Citi upgraded Liberty Oilfield Services from Neutral to Buy and raised its stock target to $32.00, citing an improving business outlook and potential growth from the company's ventures into mobile power and gas logistics. TD Cowen, on the other hand, maintained a Hold rating but lifted the price target to $21.00, acknowledging a potential seasonal improvement in free cash flow (FCF).
RBC Capital Markets reiterated an Outperform rating for Liberty Oilfield Services and increased its stock price target to $27, recognizing the company's consistent operational performance and positive industry trends. ATB Capital Markets also maintained an Outperform rating and raised its price target to $26, based on a strong FCF outlook and potential upside from increased rig and completion activity.
Finally, Wells Fargo maintained an Overweight rating on the company's stock and raised its price target to $26.00. The firm cited several reasons for its optimistic stance, including the company's discounted valuation compared to its peers, its strong FCF outlook, and the expected benefits from underlying growth momentum. These recent developments highlight the positive attention Liberty Oilfield Services has been receiving from various analysts.
InvestingPro Insights
Following Citi's reaffirmation of a Buy rating on Liberty Oilfield Services (NYSE:LBRT), with a price target of $32.00, the latest data from InvestingPro provides additional context for investors considering LBRT's stock. With a market capitalization of $3.7 billion and a price-to-earnings (P/E) ratio of 7.95, which adjusts slightly to 7.88 when looking at the last twelve months as of Q1 2024, the company shows a strong valuation metric that could appeal to value investors.
InvestingPro Tips highlight that LBRT's cash flows can sufficiently cover interest payments, and the company operates with a moderate level of debt, which is a reassuring sign of financial health. Additionally, analysts predict the company will be profitable this year, supported by the fact that LBRT has been profitable over the last twelve months.
The company's stock has also seen a high return over the last year, with a 64.34% price total return, which is quite significant. This performance, coupled with the fact that LBRT's liquid assets exceed short-term obligations, may contribute to a favorable outlook for the stock.
For those interested in deeper analysis and additional insights, InvestingPro provides further tips on Liberty Oilfield Services. Readers can make use of the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, gaining access to a comprehensive suite of tools and data for informed investment decisions. There are 6 additional InvestingPro Tips available for LBRT that can provide further guidance on the company's financial health and stock potential.
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