Analysts at Berenberg upgraded energy services supplier Hunting from ‘hold’ to ‘buy’ on Thursday, stating recent weakness had provided an “attractive entry opportunity”.
Berenberg noted that Hunting’s share price has now fallen by 30% since its trading statement on 30 June due to a weaker outlook for underlying earnings margins for the 2022 trading year.
However, Berenberg said revenue and activity levels had continued to recover, driven by the Hunting Titan and the North American segments as the rig count moves higher, and added that the group’s outlook was also strengthening, with its order book standing at $313.0m at the end of May – up over 45% since the 2021 year-end.
The German bank also noted that margins were recovering from trough levels, albeit at a slower pace than consensus expected.
“There is significant operational leverage in the business, and as the rig count continues to grow, we anticipate attractive margin expansion in 2023/24 as revenue heads back above $800.0m,” said the analysts, who also raised their target price on the stock from 220.0p to 275.0p.
“On this basis, we believe the recent sharp pullback in the shares provide an attractive entry opportunity, and we upgrade the stock to ‘buy'”.
Reporting by Iain Gilbert at Sharecast.com
