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On Thursday, CFRA analyst Stewart Glickman revised the price target for Helmerich & Payne (NYSE:HP) shares, reducing it to $25 from $39, while still recommending a Buy rating on the stock. Glickman explained that the new 12-month target is based on a 3.7x multiple of enterprise value to projected fiscal year 2026 EBITDA, which is below Helmerich & Payne’s historical forward average. This adjustment reflects heightened concerns about the land drilling market’s future.
Glickman also adjusted the company’s earnings per share (EPS) estimates, lowering the fiscal year 2025 projection by $0.47 to $3.21 and fiscal year 2026’s by $0.44 to $3.41. Despite these reductions, Helmerich & Payne’s December quarter EPS of $0.71 outperformed consensus estimates by $0.04. However, the ongoing rig suspension in Saudi Arabia, which lacks a clear resolution, continues to be a point of contention.
The analyst’s more cautious stance on Helmerich & Payne is influenced by two main factors: the softness in international markets excluding Saudi Arabia and disappointing guidance for North America in the March quarter. The earnings release from ConocoPhillips (NYSE:COP) earlier today, which included a forecast for reduced capital expenditure in the Lower 48 for 2025, is seen as indicative of a broader trend that could negatively impact demand for drilling rigs and related services.
Despite these challenges, CFRA still considers Helmerich & Payne to be a premium player in the land drilling sector. Nonetheless, the firm’s near-term outlook is tempered by economic headwinds that appear to be strengthening.
In other recent news, Helmerich & Payne’s recent financial results have shown a revenue miss, causing some investor concerns. The oil and gas drilling company disclosed a revenue of $677.3 million, falling short of Wall Street’s estimated $691.49 million. However, the firm reported earnings per share (EPS) of $0.71 for the quarter ended December 31, 2024, slightly exceeding the analyst prediction of $0.69. The company also announced the completion of the exportation of eight super-spec FlexRigs into its Saudi Arabia operations and declared a quarterly cash dividend of $0.25 per share.
The company has also recently completed the acquisition of KCA Deutag, aiming to solidify its position as a global leader in onshore drilling. ATB Capital Markets analyst Waqar Syed has commented on the company’s outlook, stating that the guidance for the second fiscal quarter EBITDA is below consensus forecasts, even considering the KCA Deutag acquisition.
In other recent developments, Citi analyst Scott Gruber upgraded Helmerich & Payne stock from Neutral to Buy, raising the price target to $40.00 from the previous $33.00. RBC Capital Markets, however, adjusted its price target downward to $41.00 from the previous $44.00, maintaining a Sector Perform rating on the company’s shares. These changes in analyst ratings follow the company’s recent developments and financial results.
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