Market Overview

Patterson-UTI Energy: Recent Weakness Reveals Relative Opportunity

Share:
Patterson-UTI Energy: Recent Weakness Reveals Relative Opportunity
Related PTEN
Benzinga's Top Upgrades, Downgrades For October 5, 2018
Credit Suisse, Seaport Upgrade Patterson-UTI After Stock Decline

Shares of Patterson-UTI Energy, Inc. (NASDAQ: PTEN) have lost around 40 percent since the start of 2017, highlighted by a 26-percent decline since July 19, analysts at JPMorgan said in a research report. As such, the firm's Sean Meakim now sees Patterson-UTI's stock as being attractive enough to warrant an upgrade from Neutral to Overweight with an unchanged $24 price target (see Meakim's track record here).

Patterson-UTI's stock is currently trading at 5.5x the analyst's 2018 EBITDA, which makes it the cheapest among all land driller companies under his coverage. Investors may want to take advantage of this "dislocation in valuation" as the stock's poor performance isn't justified by the fundamentals. In fact, the company still boasts solid exposure to the best volume and pricing story in the North American frac industry.

In addition, Patterson-UTI's stock is trading at 0.6x EV/replacement value, which implies it is "getting little credit versus drilling plays," the analyst also noted. On top of that, when accounting for only the company's tier 1 rigs and frac equipment, the stock is still only valued at 0.74x EV/replacement value which adds another level of support at current levels.

Finally, looking forward to 2018 Patterson-UTI is expected to reactivate three more fleets in the bottom half of the year that will be accretive to its margins and push its utilization rate above 80 percent, the analyst added.

At last check, shares of Patterson-UTI were up 6.09 percent at $16.91.

Related Links:

5 Stocks To Watch For September 5, 2017

The Market In 5 Minutes

Latest Ratings for PTEN

DateFirmActionFromTo
Oct 2018Raymond JamesMaintainsStrong BuyStrong Buy
Oct 2018BernsteinInitiates Coverage OnOutperform
Sep 2018CitigroupMaintainsBuyBuy

View More Analyst Ratings for PTEN
View the Latest Analyst Ratings

Posted-In: Analyst Color Long Ideas News Commodities Markets Analyst Ratings Movers Trading Ideas Best of Benzinga

 

Related Articles (PTEN)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
LXFTKeyBancDowngrades0.0
CPAImperial CapitalDowngrades68.0
PRMWImperial CapitalInitiates Coverage On18.0
TGTKeyBancInitiates Coverage On110.0
QCOMMorgan StanleyUpgrades0.0
View the Latest Analytics Ratings
Don't Miss Out!
Join Our Newsletter
Subscribe to:
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
Your weekly roundup of hot topics in the exciting world of fintech.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

Alexion Pharma Stock A Buy After A Pair Of 'De-Risking' Events In 2017

WWE's Labor Day Announcement: We're Working On Christmas And New Year's