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On Tuesday, Citi analyst Scott Gruber increased the price target on ProPetro Holding (NYSE:PUMP) shares to $10.00, up from the previous $8.00, while keeping a Neutral rating on the stock. The new target comes as PUMP trades near its 52-week high of $10.13, having delivered an impressive 18.5% return over the past six months.
According to InvestingPro data, the stock currently trades at $9.81, with analyst targets ranging from $8 to $12. Gruber adjusted the company's fourth-quarter EBITDA estimate downward by 6% to $50 million, which increases to $54 million when adding back stock compensation, versus the consensus of $57 million. The revision reflects a slight dip in industry activity during the quarter.
For the first quarter, Gruber anticipates a modest improvement for ProPetro, with EBITDA expected to rise to $55 million, or $59 million including stock compensation, compared to a consensus estimate of $67 million. This forecast is based on the assumption that the 110 MW of power on order will be deployed between the second half of 2025 and the first half of 2026. The deployment is projected to yield a 3.5-year payback on the $122 million of invested capital, after accounting for lease expenses.
Looking ahead to 2025, Citi forecasts ProPetro's EBITDA to reach $237 million, which would amount to $253 million when adding back stock compensation. This figure is notably lower than the consensus estimate of $283 million. For 2026, the forecast is for an EBITDA of $270 million, or $286 million with stock compensation included, once again falling short of the consensus projection of $305 million. For context, InvestingPro shows the company's current EBITDA stands at $277.38 million, with the company maintaining a moderate debt level and strong cash flow metrics. Subscribers can access 6 additional ProTips and comprehensive valuation analysis in the Pro Research Report.
The revised $10 price target reflects a higher valuation multiple of approximately 4 times, which Gruber attributes to ProPetro's growth potential leading into 2026. Despite the increased price target, the Neutral rating suggests a cautious stance on the stock's current valuation relative to its future growth prospects. InvestingPro's Fair Value analysis suggests the stock is slightly undervalued at current levels, with a market capitalization of $1.01 billion and an EV/EBITDA ratio of 4.07x.
In other recent news, ProPetro Holding Corp has made significant strides in diversifying its services and bolstering its financial performance. The company recently reported robust Q3 2024 financial results, with an 8% increase in Adjusted EBITDA to $71 million and an adjusted net income of $13 million. This marks a significant improvement from a $4 million loss in the previous quarter. Revenues for the same quarter were reported at $361 million.
In another major development, ProPetro launched ProPWR, a new venture focused on mobile natural gas-fueled power generators. The company placed an initial order for 110 megawatts of these generators to meet the rising energy demands within the Permian Basin, a region known for extensive oil and natural gas production. This initiative is expected to create new revenue streams for ProPetro.
Analysts have noted the company's strategic transition to electric frac fleets, with a fourth and fifth fleet expected by early 2025. Despite projections of a sequential revenue decline of about 10% and EBITDA decrementals of 26% to 30%, the company's focus on modernizing its fleet and expanding service offerings positions it for sustained growth.
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