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Liberty Oilfield’s 3Q Sales Top Estimates As Completions Recover

support@smarteranalyst.com (Ben Mahaney)
·2 min read

Liberty Oilfield’s third-quarter revenues of $147 million plunged 71.4% year-over-year but came ahead of the Street consensus of $126.3 million. Moreover, the top-line of the oilfield service provider showed a sharp sequential improvement, surging 67% from the second quarter amid a recovery in completions activity.

The company flipped to a loss of $0.41 per share in the third quarter compared to earnings of $0.15 posted in the year-ago quarter. Analysts had expected a loss of $0.42 per share.

Liberty Oilfield’s (LBRT) CEO Chris Wright said “Our business expanded with top tier customers during the third quarter, and we entered a major gas basin, the Haynesville Shale, with an existing customer. The completions activity rebound is modestly ahead of the pace we expected earlier this year.”

During the quarter, the company agreed to acquire OneStim, which is Schlumberger’s North American pressure pumping and related businesses. The company expects the deal to be completed by the end of the fourth quarter.

The company anticipates 4Q average active fleets, excluding the pending OneStim acquisition, to increase more than 20% from 9.4 average fleets working in 3Q. The company also said “While the COVID-19 pandemic will continue to bring uncertainty in global oil demand in the months ahead, incremental monthly improvement in completions activity from a low point in May is a welcome sign of progress.” (See LBRT stock analysis on TipRanks).

On Oct. 13, Merrill Lynch analyst Chase Mulvehill downgraded the stock to Hold from Buy, but raised the price target to $10.75 (37.8% upside potential) from $9.75. The analyst thinks Liberty’s peer NexTier Oilfield has a better risk/reward profile at current levels. He added that Liberty stock has outpaced NexTier's performance by almost 70% so far in the second half of the year, but believes that the trend is "set to reverse."

Currently, the Street has a cautiously optimistic outlook on the stock. The Moderate Buy analyst consensus is based on 5 Buys and 3 Holds. The average price target of $9.32 implies upside potential of about 19.5% to current levels. Shares have declined by about 29.9% year-to-date.

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