Stifel maintains Buy on Oil States International, target at $9

On Monday, Stifel analysts maintained a Buy rating on Oil States International (NYSE:OIS) shares, with a steady price target of $9.00, representing significant upside from the current price of $4.74. The stock has experienced a sharp 12.5% decline over the past week, according to InvestingPro data. The firm’s analyst, Stephen Gengaro, highlighted that the company faced several challenges in the previous quarter, including extended holiday downtimes and a slow recovery in completions activity in the Gulf of America. These issues were due to disruptions experienced during the third quarter of 2024.

Despite these past difficulties, management has indicated that these obstacles are now behind them. The analyst noted that the guidance for 2025 aligns with expectations and that Oil States International is poised to generate solid free cash flow (FCF). The company’s strong financial position is evidenced by its healthy current ratio of 3.16 and moderate debt levels, with debt-to-equity at just 0.22, as reported by InvestingPro. Additionally, the company is expected to continue its share buyback program.

Gengaro pointed out that Oil States International is currently trading at under 4 times its projected 2025 and 2026 earnings before interest, taxes, depreciation, and amortization (EBITDA). This valuation suggests that the shares are undervalued, according to Stifel’s analysis.

The company’s financial resilience seems to be underscored by its ability to overcome recent operational challenges and by its positive outlook for free cash flow and shareholder return initiatives. With the guidance meeting analysts’ projections, the company appears to be on a stable path for the year ahead.

The affirmation of the $9.00 price target by Stifel reflects confidence in the intrinsic value of Oil States International as it moves past the headwinds of the previous quarters. The stock’s current valuation, as noted by the analyst, presents a potential upside for investors based on the firm’s earnings multiples forecast. According to InvestingPro, analyst targets range from $5.75 to $9.00, with multiple additional insights and financial metrics available for subscribers, including a comprehensive Pro Research Report that provides deep-dive analysis of the company’s fundamentals and growth prospects.

In other recent news, Oil States International reported its fourth-quarter 2024 earnings, showing a mixed performance. The company exceeded earnings per share (EPS) expectations, posting $0.09 compared to the forecasted $0.075, but fell short on revenue, reporting $164.6 million against the anticipated $182.13 million. Despite this revenue miss, the company remains optimistic about its future, providing a positive revenue guidance for 2025, with projections ranging from $700 million to $735 million. The company anticipates strong EBITDA growth between $88 million and $93 million. Oil States International also announced a strategic focus on international and offshore markets, which now make up 72% of its total revenue. Analysts from firms such as Stifel and Raymond (NSE:RYMD) James have shown interest in the company’s strategic direction, particularly regarding shareholder returns and market opportunities. The company has been actively buying back shares, with $9 million repurchased in the fourth quarter, and plans for ongoing share repurchases throughout 2025.

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