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On Wednesday, Citi analyst Scott Gruber adjusted the price target for Liberty Oilfield Services (NYSE:LBRT) to $16.00, down from the previous target of $20.00, while maintaining a Neutral rating on the stock. The revision follows a reassessment of the company’s first-quarter earnings before interest, taxes, depreciation, and amortization (EBITDA) projections and the pace of power deployment. According to InvestingPro data, the stock is currently trading at $14.62, near its 52-week low of $13.86, with analysis suggesting the shares are undervalued based on Fair Value calculations.
Gruber mentioned that the firm’s first-quarter EBITDA estimate has been reduced by 3% to $150 million. This figure increases to $158 million when stock compensation is factored in. The adjustment is attributed to a slower-than-expected start to the year, influenced by weather conditions and customer scheduling. Additionally, the anticipated deployment of 150 megawatts of generator capacity has been moderated, with the bulk now expected to occur in the fourth quarter. The company’s last twelve months EBITDA stands at $889.18 million, with InvestingPro analysis revealing 8 additional key insights about the company’s financial health and market position.
The analyst also revised the 2025 EBITDA forecast downward by 3%, setting it at $663 million, or $695 million with stock compensation included. Gruber pointed out that, excluding the anticipated power EBITDA and capital expenditures for 2025, Liberty Oilfield Services is currently trading at approximately 3.8 times EBITDA and offers around an 8% free cash flow yield.
Gruber’s assessment suggests that the market is pricing the stock close to its value without considering the potential benefits from its power segment, implying that the power option is essentially being given no additional value. For the stock to experience upside, Gruber believes that investors will need to gain confidence in the company’s earnings estimates and the power segment’s contribution to EBITDA growth, particularly in the second half of the year.
In other recent news, Liberty Energy reported its fourth-quarter 2024 earnings, revealing an earnings per share (EPS) of $0.10, which fell short of the anticipated $0.16. The company’s revenue for the quarter was $944 million, below the projected $997.31 million, marking a 17% sequential decline. Liberty Energy also announced the acquisition of IMG Energy Solutions, a developer of distributed power systems, to enhance its subsidiary Liberty Power Innovations’ offerings. This acquisition aims to expand Liberty’s engineering capabilities and market participation, particularly in the PJM market. Additionally, the company made significant leadership changes, appointing Ron Gusek as Chief Executive Officer and William Kimble as non-executive Chairman of the Board. These changes align with the confirmation of the company’s founder, Chris Wright, as the U.S. Secretary of Energy. Furthermore, Liberty Energy announced the resignation of board member Audrey Robertson, who is stepping down following her nomination for a government position as Assistant Secretary of Energy, Efficiency and Renewables. These developments reflect Liberty Energy’s ongoing strategic initiatives and leadership transitions.
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