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On Tuesday, Citi analyst Scott Gruber adjusted the price target for Atlas Energy Solutions Inc (NYSE:AESI), lowering it to $14.00 from the previous $18.00, while maintaining a Neutral stance on the stock. The revision follows Atlas Energy’s first-quarter earnings call, which led to changes in the company’s financial model. According to InvestingPro data, the stock currently trades at $13.23, having declined over 36% in the past six months. Despite the recent price weakness, the company maintains a significant 7.56% dividend yield.
Gruber’s update to the model reflects a reduction in the estimated proppant sales for 2025, now anticipated to be around 23 million tons, a decrease from the previously expected 25 million tons. This adjustment is due to a slowdown in drilling and completion (D&C) activity. Additionally, the analyst revised estimates for Atlas Energy’s logistics segment, predicting a gradual improvement in margins to the low-20% range by 2025. This is attributed to lower volumes than initially projected being transported via the Dune Express.
The company has indicated that it expects its adjusted EBITDA to remain relatively flat on a quarter-over-quarter basis. Gruber forecasts a second-quarter adjusted EBITDA of approximately $76 million and a full-year 2025 EBITDA of $302 million. These figures are in line with the recent consensus from FactSet, which places second-quarter EBITDA at around $75 million and full-year 2025 EBITDA at approximately $300 million. The company’s last twelve months EBITDA stands at $243.18 million, with impressive revenue growth of 77.72% over the same period.
Gruber’s valuation of Atlas Energy Solutions employs a sum-of-the-parts methodology, assigning a 3.5 times 2026 EBITDA multiple to the sand production business, an 8 times multiple to the logistics business, and a 7 times multiple to the new power business. Despite the adjustments, the analyst’s outlook on the company remains neutral, citing the broader bearish sentiment in the oil market as a backdrop for the decision to revise the price target downward. InvestingPro analysis suggests the stock is currently undervalued, with additional insights available in the comprehensive Pro Research Report, which provides detailed analysis of the company’s financial health, valuation metrics, and growth prospects.
In other recent news, Atlas Energy Solutions reported its Q1 2025 earnings, revealing a significant shortfall in earnings per share (EPS) compared to analyst expectations. The company posted an EPS of $0.01, falling short of the anticipated $1.06. However, Atlas exceeded revenue expectations, reporting $297.6 million against a forecast of $234.1 million, indicating strong sales performance. Additionally, Atlas Energy Solutions completed the acquisition of Moser Energy Systems and launched the Dune Express logistics infrastructure. Despite the EPS miss, the company maintains a competitive position in the market, supported by its low-cost sand and logistics offerings.
Atlas Energy Solutions has projected a total capital expenditure of $115 million for 2025, with Q2 volumes expected to remain flat or increase slightly. The company anticipates an adjusted EBITDA run rate of $70-80 million, potentially rising to $80-100 million with deferred projects. The integration of Moser Energy Systems is progressing well, with positive customer feedback. Atlas also faces risks from commodity price volatility and market uncertainty, which could impact customer spending and lead to project deferrals.
Analysts have noted the company’s resilience and strategic advantages, with John Turner, CEO of Atlas Energy Solutions, emphasizing the company’s ability to navigate market fluctuations. The company has been structured to perform through both up cycles and downturns, leveraging its low-cost structure and logistical advantages. Despite the current market challenges, Atlas Energy Solutions is confident in its long-term outlook, grounded in strategic clarity and operational discipline.
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