Analyst: Tetra Technologies Is An 'EBITDA Engine'

Tetra Technologies, Inc. TTI, a global oil and gas services company, boasts a leading position in three unique end markets which makes it an "EBITDA engine," according to B. Riley FBR.

The Analyst

B. Riley FBR's Thomas Curran initiated coverage of Tetra Technologies with a Buy rating and $8 price target.

The Thesis

Tetra Technologies' leadership position should enable it to grow its adjusted consolidated EBITDA at a 28 percent compounded annual growth rate through 2019, Curran said in a note. The first segment, Water & Flowback Services is estimated to account for 31 percent of 2018 revenue and management continues to expand its platform to provide a differentiated, multi-offering solutions that focuses on its core temporary transfer and flowback/well testing services.

Completion Fluids & Products should provide 29 percent of total 2018 revenue and the company boasts an estimated 30 percent market share, which makes it the third largest player in the world. Management set out a goal of expanding its CS Neptune (a high-density fluid) from one market today to four by 2020.

The Compression business boasts an encouraging geographic positioning and vertical integration. The segment should benefit from U.S. natural gas output which is expected to grow at an average rate of 6 percent per year through 2020.

Price Action

Shares of Tetra Technologies were trading higher by more than 5 percent Friday to $4.79.

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