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Investing.com - Texas Capital Securities lowered its price target on Aris Water Solutions Inc (NYSE:ARIS) to $25.00 from $30.00 on Thursday, while maintaining a Buy rating on the stock. According to InvestingPro data, ARIS currently trades at a P/E ratio of 25.24x and maintains a "Good" financial health score, with revenue growing at 12% year-over-year.
The adjustment follows Western Midstream’s announcement on Wednesday that it would acquire Aris Water Solutions in an equity and cash transaction with an enterprise value of approximately $2.0 billion.
The purchase price represents a roughly 25% premium based on August 6 closing prices, assuming the cash option of $25.00 per share, according to Texas Capital Securities.
Texas Capital noted that the transaction supports its thesis that produced water handling in the Delaware Basin will present significant challenges in the future, with rates needing to increase substantially to meet industry water handling needs.
The firm also suggested the deal highlights the value of surface positions held by LandBridge and Texas Pacific Land (NYSE:TPL), while potentially implying upside for NGL Energy Partners (NYSE:NGL) at the implied 2026 EV/EBITDA multiple of approximately 9.0x.
In other recent news, Aris Water Solutions has entered into a merger agreement with Western Midstream Partners (NYSE:WES), valued at approximately $1.5 billion, with a total enterprise value of about $2 billion. This deal offers Aris shareholders 0.625 common units of Western Midstream for each Aris share, with an option for $25.00 per share in cash, up to a maximum of $415 million. Following this merger announcement, Stifel downgraded Aris Water Solutions from Buy to Hold and reduced its price target to $25.00. In another development, Aris has extended its Water Gathering and Disposal Agreement with ConocoPhillips (NYSE:COP) until 2040, maintaining the original terms for water infrastructure services. JPMorgan has assumed coverage of Aris Water Solutions with a Neutral rating and set a price target of $25.00 for December 2026. Meanwhile, Goldman Sachs reiterated its Buy rating on Aris, adjusting the price target to $28.00, and expects second-quarter 2025 EBITDA to be $54 million, slightly below previous estimates. These recent developments highlight significant changes and expectations for Aris Water Solutions in the financial markets.
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