From the Globe Today * Stifel’s Cole Pereira increased his target for shares of CES Energy Solutions Corp. (
) to $5, exceeding the $4.50 average on the Street, from $4.25 with a “buy” rating.
“CEU has materially outperformed in the past month (up 32 per cent vs. our coverage universe average of 7 per cent), however we see further near-term valuation upside from multiple factors,” he said. “In summary: (1) Underappreciated strength in CEU’s FCF profile with the highest EBITDAS-FCF conversion and lowest EV/FCF multiple in 2023 within our coverage is supporting meaningful shareholder returns; (2) Market share capture and its production focus has offset broader declines in U.S. activity; (3) Recent input cost deflation could sustain margin expansion; and (4) Narrowing the valuation gap with its closest peer ChampionX (covered by Stephen Gengaro) could drive its valuation higher, and we estimate an equity value of $4.34-6.85 per share (13-79-per-cent upside) at 5-7 times 2024E EBITDAS vs. 4.6 times currently and CHX at 9.0 times. There are no changes to our estimates or Buy rating, but we have increased our target price to $5.00 per share to reflect our view on incremental valuation upside.”