In a separate report previewing the year ahead for Canadian oilfield services providers, National Bank's Mr. Payne predicts stability in the sector “as relatively rangebound commodity prices continue to support static spending in the upstream, and translates through to a stable outlook for the service providers.”
“That perspective should continue to opportunistically position to positive themes (increased industry intensity & structural return of capital) and incremental upside (notably through gas prices with respect to LNG and power burn),” he said.
“Overall, that orientation continues to provide a value-bias through its stability, excess free cash and cadence of return of capital, with the space continuing to trade at a relative discount to historical. As such, we have revised our pecking order (based on a risked assessment of earnings momentum, free cash and valuation, as a product of the relative exposure to the noted thematics) as; PD, TCW, PSI, CEU, EFX (while continuing to acknowledge the relative uniformity throughout; dealers choice).”
The analyst made target price adjustments on Thursday. They are:
* CES Energy Solutions Corp. (“sector perform”) to $11.50 from $10. The average on the Street is $10.72.
Analyst: “Continued entrenchment of (and the poster child for) the intensity thematic towards expanded margins and returns (including an active buyback), which in association with continued appreciation by the street (including expanding estimates), should continue to elicit multiple support (having expanded 65 per cent year-to-date in ‘24; currently trading at 5.8 times 2025e EV/EBITDA vs. peers 7.5 times).”