There’s a lot to be optimistic about in the Materials sector as 2 analysts just weighed in on Archrock (AROC) and US Silica Holdings (SLCA) with bullish sentiments.
Archrock (AROC)
B.Riley FBR analyst Tom Curran reiterated a Buy rating on Archrock yesterday and set a price target of $17. The company’s shares closed yesterday at $11.01.
Curran said:
“Last night, 7/29, AROC reported 2Q19 adjusted EBITDA of $100.7M, exceeding the Street’s $95.7M and our $95.8M. Thus, over the seven quarters ending 2Q19, AROC has delivered adjusted EBITDA upside for six. To incorporate the pending acquisition of Elite Compression, which is expected to close in 3Q19, AROC revised its 2019 guidance ranges for (1) total revenue from $955-1,015M to $980-1,010M (consensus: $1,017M), (2) adjusted EBITDA from $370-400M to $400-410M (consensus: $394.6M), (3) cash available for dividend from $174-194M to $210-220M, (4) net income from $73-103M to $70-80M (consensus: $89.9M), and (5) total capex from to $375-400M (consensus: $413M). We believe AROC’s 2Q19 beat and 2019 guidance range increases strongly reinforce our thesis and reiterate our Buy rating and $17 price target. Call is at Noon ET.”
According to TipRanks.com, Curran is currently ranked with no stars on a 0-5 star ranking scale, with an average return of -9.9% and a 37.7% success rate. Curran covers the Basic Materials sector, focusing on stocks such as Solaris Oilfield Infrastructure Inc, Independence Contract Drilling, and Select Energy Services Inc.
Archrock has an analyst consensus of Moderate Buy, with a price target consensus of $14.50.
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US Silica Holdings (SLCA)
B.Riley FBR analyst Lucas Pipes reiterated a Buy rating on US Silica Holdings today and set a price target of $20. The company’s shares closed yesterday at $12.78.
Pipes observed:
“Yesterday, U.S. Silica (SLCA) reported 2Q adjusted EBITDA of $85.5M, beating consensus of $75.7M and our estimate of $74.0M. While volumes in the Oil and Gas segment came in slightly below expectations, this was more than offset by strong pricing of $67.8/ton—driven by high last-mile usage and resilient NW pricing. In addition, contribution margin in the ISP segment also beat expectations with $51.6/ton, which was an impressive 12% improvement from the prior quarter. We believe that the benefits of the ISP segment have been underappreciated by the investment community (as highlighted in our recent note “Jumping Sand Industry”). In addition, the company’s realized pricing in the Oil and Gas segment has held up better than many of its peers.”
According to TipRanks.com, Pipes is a 1-star analyst with an average return of -0.9% and a 45.1% success rate. Pipes covers the Basic Materials sector, focusing on stocks such as Peabody Energy Corporation Comm, Novagold Resources Inc New, and Covia Holdings Corporation.
US Silica Holdings has an analyst consensus of Hold, with a price target consensus of $15.79.
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