Upgrade In a research report wrapping up first-quarter earning season, Canaccord Genuity analyst John Bereznicki made series of target changes to oilfield services providers in his coverage universe on Friday.
“Despite improving oilfield fundamentals, sector trading multiples remain depressed by historic standards,” he said. “When external equity and debt capital was readily available, operators could outspend cashflow and create bullish tailwinds for the oilfield sector. With this no longer the case, we believe investor OFS growth expectations have fallen significantly and trading multiples have compressed accordingly. In our view, this has also reduced the market capitalization of the oilfield sector, making it less relevant to institutional holders. We believe this has two investment implications: i) future OFS share price appreciation is more likely to be driven by upward revisions in investor cashflow expectations than multiple expansion; and ii) the oilfield sector needs more consolidation to support investor relevance.”
His adjustments were:
- Mullen Group Ltd. ( “hold”) to $14 from $13.50. The average is $13.75.