Stephens raises Atlas Energy Solutions price target to $29

On Tuesday, Stephens analyst Michael Scialla increased the price target for Atlas (NYSE:ATCO) Energy Solutions Inc (NYSE:AESI) to $29.00 from the previous target of $28.00, while maintaining an Overweight rating on the company's shares. The adjustment comes in response to the firm's recent acquisition of Moser Acquisitions, Inc. The stock, currently trading near its 52-week high of $25.38, has delivered an impressive 48% return over the past year. According to InvestingPro analysis, the company appears slightly undervalued based on its Fair Value metrics.

Scialla's decision to raise the target price is based on updated financial projections for Atlas Energy Solutions . Specifically, the analyst has increased the 2025 cash flow per share (CFPS) and earnings before interest, taxes, depreciation, and amortization (EBITDA) estimates by 8% and 11%, respectively. The acquisition is viewed as accretive, meaning it is expected to add value to Atlas Energy Solutions' earnings. InvestingPro data shows the company's current EBITDA stands at $262 million, with robust revenue growth of 49% in the last twelve months.

The purchase of Moser Acquisitions, valued at approximately $220 million, represents a multiple of about 4.3 times Moser's annual EBITDA. This valuation is notably lower than Atlas Energy's estimated enterprise value to 2025 EBITDA multiple of 7.2 times. The deal is seen as a diversification move for Atlas Energy, introducing the company to the distributed power business, which is currently experiencing a tight market with significant growth opportunities. With a market capitalization of $2.72 billion and a P/E ratio of 30.2x, Atlas Energy demonstrates significant scale in its market segment.

Scialla highlighted Moser's impressive EBITDA margin, which exceeds 50%, as a key factor in the acquisition. The new price target of $29 per share assumes that Atlas Energy Solutions will achieve an enterprise value to 2026 EBITDA multiple of 7.6 times. This multiple is higher than the 6.4 times average of the mid-cap oilfield service peer group.

The acquisition is anticipated to provide Atlas Energy Solutions with a strategic advantage in the distributed power sector, bolstering its financial performance and market position. The Overweight rating suggests that Stephens views Atlas Energy Solutions' stock as a good investment, with performance expectations exceeding the average market return.

In other recent news, Atlas Energy Solutions has announced the acquisition of Moser Acquisition for $220 million, a move expected to diversify its portfolio and enhance its offerings in the power solutions sector. The transaction is anticipated to close by the end of the first quarter of 2025. The company has also projected a significant rise in its fourth-quarter revenue, expecting to report between $270 million and $272 million.

Despite these developments, Atlas Energy has received a series of downgrades from major firms including BofA Securities, Goldman Sachs, and Citi, shifting the stock rating from Buy to Neutral due to concerns over the company's financial forecasts. Nevertheless, Atlas Energy maintains strong fundamentals, with revenue reaching $925.76M and year-over-year growth of 48.67%.

Additionally, Atlas Energy reported a 6% quarterly increase in revenue, reaching $304 million, and announced a dividend increase to $0.24 per share and a $200 million share repurchase program, indicating confidence in its financial health. These recent developments provide insight into Atlas Energy's strategic moves and financial performance.

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