Stifel analysts maintain buy rating on Cactus stock after acquisition

On Tuesday, Stifel analysts reiterated a Buy rating and a $57 price target for Cactus, Inc. (NYSE: WHD), representing a potential 37% upside from the current price of $41.47. The reaffirmation follows Cactus’s announcement of plans to acquire a 65% stake in Baker Hughes (NASDAQ:BKR)’ Surface Pressure Control business. According to InvestingPro analysis, Cactus maintains a "GREAT" financial health score, positioning it well for this strategic move.

The acquisition is expected to enhance Cactus’s international growth, especially in the Middle East, which currently contributes approximately 85% of Surface Pressure Control’s revenues. Stifel analysts noted that this move aligns with Cactus’s strategy to expand beyond its strong North American operations. The company’s solid financial foundation, with more cash than debt on its balance sheet and a healthy current ratio of 4.85x, provides strong support for this expansion.

Cactus management anticipates completing the transaction in the second half of 2025. They highlighted the expected ease of integrating the Surface Pressure Control business as a significant factor in their decision to proceed with the acquisition.

Stifel analysts expressed confidence in Cactus’s ability to improve the margins of the Surface Pressure Control business, which currently stand at around 17%. They believe Cactus’s strong financial position will support this endeavor effectively.

The analysts also reiterated their Buy rating on Baker Hughes, reflecting confidence in the strategic benefits of the transaction for both companies.

In other recent news, Cactus Inc (NYSE:WHD). reported its first-quarter 2025 earnings, exceeding analyst expectations with an earnings per share of $0.73 compared to the projected $0.67. The company’s revenue also surpassed forecasts, reaching $280.32 million against an expected $270.57 million. Cactus Inc. demonstrated a 3% sequential increase in total revenue and reported an adjusted EBITDA of $94 million. In a strategic move, Cactus Companies, a unit of Cactus Inc., announced plans to acquire a 65% controlling interest in Baker Hughes’ Surface Pressure Control business for $344.5 million. This acquisition, valued at $530 million on a cash-free, debt-free basis, is expected to close in the second half of 2025. Additionally, Cactus Inc. held its Annual Meeting of Stockholders, where the board was reelected, and an amendment to the Long-Term Incentive Plan was approved. The company also ratified the appointment of PricewaterhouseCoopers LLP as its independent registered public accounting firm for the fiscal year ending December 31, 2025.

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