Cactus's Strong Q1 Performance Prompts Price Target Increase by Barclays Analyst

Barclays's David Anderson raised their price target on Cactus (NYSE: WHD) by 1.8% from $55 to $56 on 2024/05/06. The analyst maintained their Strong Buy rating on the stock.

In an upbeat assessment of Cactus's Q1 2024 earnings report, Anderson highlighted the company's strong performance in the onshore energy services group. Anderson stated, "earnings from the onshore energy services group highlighted a consistent and common theme of free cash flow generation, elevated shareholder returns, and margin expansion, three pillars to support a future re-rating of the stock."

Cactus's Q1 2024 earnings surpassed expectations, with an EPS of $0.75, beating the Zacks Consensus Estimate of $0.67 and showing a 17.2% increase compared to Q1 2023's $0.64. The company also reported revenue of $274M, exceeding the Zacks Consensus Estimate of $268M and showing a 20.2% increase compared to Q1 2023's $228M.

Looking ahead, Cactus's management provided guidance for Q2 2024 and FY 2024. They anticipate a sequential decline in U.S. land activity levels due to ongoing weakness in gas prices and global geopolitical uncertainties. However, they expect pressure control segment revenue to remain relatively stable, supported by robust sales of production equipment in April 2024. The spoolable technologies segment is expected to see a slight increase in revenue. For FY 2024, Cactus plans capex of $45M to $55M.

Chairman & CEO Scott Bender expressed satisfaction with the company's Q1 performance, stating that consolidated revenue and margins modestly exceeded expectations. He highlighted the growth in the Spoolable Technologies business, which saw increased revenue compared to Q4 203, attributing it to strong activity from large customers. Bender also mentioned several opportunities for cost improvement and revenue expansion, including the rollout of a new wellhead system, progress on international expansion plans, and orders from a major new midstream customer for spoolable pipe.

The positive outlook for Cactus is echoed by analysts, with 100% of top-rated analysts currently rating the stock as a Strong Buy or Buy. No analysts consider it a Hold, and there are no recommendations to sell the stock. The consensus forecast among analysts is that Cactus's upcoming year will deliver earnings per share (EPS) of $2.69, reflecting a 5.7% increase on a year-over-year basis.

Since Cactus's latest quarterly report on May 1, 2024, the stock price has increased by 4.3%. On a year-over-year basis, the stock is up by 35%, outpacing the S&P 500, which has seen a 25.2% increase during the same period.

Barclays analyst David Anderson, who raised the price target on Cactus, is ranked in the top 13% of Wall Street analysts by WallStreetZen. With an average return of 5.8% and a win rate of 55.1%, Anderson specializes in the Industrials and Energy sectors, among others.

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