There’s a lot to be optimistic about in the Materials sector as 2 analysts just weighed in on Archrock (NYSE:AROC) and Southwestern Energy (NYSE:SWN) with bullish sentiments.
Archrock (AROC)
In a report released yesterday, Tom Curran from B.Riley FBR reiterated a Buy rating on Archrock, with a price target of $15. The company’s shares opened today at $13.70, close to its 52-week high of $13.75.
Curran said:
“AROC reported 2Q18 revenue and adjusted EBITDA of $226.9M and $84.7M, besting our $217M and $80.1M and the Street’s $215.9M and $79.6M. The company realized a top line/gross margin for $165.5/59% versus guidance bands of $162-to-166M and 59- to-61% and for AMS (Aftermarket Services) of $61.4M/17.3% versus ranges of $48-to-52M and 15-to-17%. SG&A was held to just $26.6M, compared to guidance of $28-to-29M, while both interest expense and D&A came in as management projected. Thus, relative to consensus, the EBITDA beat of ~5M (6%) arose from (1) a higher top line of $11M (about $4M or 80% of the upside) on stronger AMS revenues, and (2) better profitability (the remaining $1M or 20%), due to a higher AMS margin and lower SG&A.”
According to TipRanks.com, Curran ‘s ranking currently consits of no stars on a 0-5 ranking scale, with an average return of -4.0% and a 46.4% success rate. Curran covers the Basic Materials sector, focusing on stocks such as Independence Contract Drilling, Select Energy Services Inc, and Diamond Offshore Drilling.
The word on The Street in general, suggests a Strong Buy analyst consensus rating for Archrock with a $14.92 average price target, representing an 8.9% upside. In a report issued on July 18, Piper Jaffray also reiterated a Buy rating on the stock with a $13.75 price target.
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Southwestern Energy (SWN)
B.Riley FBR analyst Rehan Rashid reiterated a Buy rating on Southwestern Energy today and set a price target of $10. The company’s shares opened today at $5.
Rashid noted:
“Southwestern Energy Company (SWN) reported an Appalachian production beat for the quarter and increased its FY18 guidance to reflect ongoing improvement in Appalachian asset productivity. Half of the beat was from Oil and NGL production outperformance. This tilting of production towards higher liquids content and productivity improvement has been, and remains, a central part of our investment thesis. We believe that pro forma the Fayetteville sale of Appalachian assets sell for about 55% of peer group 2019 TEV multiples and it simply should not. We reiterate our Buy rating and $10 PT.”
According to TipRanks.com, Rashid is a 4-star analyst with an average return of 16.5% and a 65.7% success rate. Rashid covers the Basic Materials sector, focusing on stocks such as Continental Resources, Lonestar Resources US, and Range Resources Corp.
The word on The Street in general, suggests a Hold analyst consensus rating for Southwestern Energy with a $5.92 average price target.
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