Patterson-UTI Energy price target lowered to $6.25 at Citi on weak frac utilization

Investing.com - Citi lowered its price target on Patterson-UTI Energy (NASDAQ:PTEN) stock to $6.25 from $6.50 on Thursday, while maintaining a Neutral rating, citing weaker-than-anticipated fracturing fleet utilization. The stock, which has declined over 10% in the past week, currently trades below analyst consensus targets ranging from $6.50 to $13.00. According to InvestingPro analysis, the company appears undervalued despite recent challenges.

The firm reduced its active fleet forecast to 28 for the second quarter while also trimming margin expectations, resulting in approximately $90 million of segment gross profit, down 13%. Citi also adjusted its second-quarter active rig count forecast downward by one unit while maintaining its rig margin projection. Despite these challenges, InvestingPro data shows the company maintains strong financial health with a ’Good’ overall score and has consistently paid dividends for 22 consecutive years.

These adjustments led Citi to decrease its second-quarter EBITDA forecast by 7% to $224 million, with third and fourth quarter EBITDA estimates trimmed to $201 million and $171 million, respectively, reflecting contract roll and the typical seasonal decline at year-end.

For capital expenditures, Citi projects Patterson-UTI could spend slightly below its $600 million budget in 2025, modeling approximately $580 million, with further budget declines expected in 2026 to around $545 million.

The firm believes the fourth quarter will represent the bottom for Patterson-UTI’s EBITDA, but notes this bottom appears approximately 15% lower than the current consensus forecast.

In other recent news, Patterson-UTI Energy reported its first-quarter 2025 earnings, surpassing analyst expectations with an earnings per share (EPS) of $0.0047, compared to the forecasted loss of $0.04. The company also exceeded revenue forecasts, reporting $1.281 billion against an expected $1.18 billion. This strong performance was driven by robust results in natural gas-powered equipment and drilling services. Patterson-UTI Energy returned $51 million to shareholders through dividends and share repurchases, maintaining a focus on shareholder returns.

In related developments, RBC Capital reaffirmed its Outperform rating on Patterson-UTI Energy stock, citing confidence in the company’s strategic focus amid volatile oil prices. Meanwhile, Susquehanna analysts adjusted their price target for Patterson-UTI Energy stock to $8 from $9, reflecting updates from a recent investor presentation. They maintained a Positive rating despite lowering their EBITDA projections for the company. These recent developments highlight Patterson-UTI Energy’s strategic positioning in the market and its ongoing commitment to financial discipline.

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