JPMorgan Reiterates Neutral Rating on Cactus, Inc. (WHD)

JPMorgan analyst Arun Jayaram reiterated a Neutral rating and $58.00 price target on Cactus, Inc. (NYSE: WHD).

The analyst comments "Despite softer than anticipated U.S. land activity, we expect an in-line 2Q24 print, which we think could be digested in a positive light by the buyside relative to their NAM peers. We believe WHD’s outlook is intact, as management prudently underpinned its 2Q24 guide with U.S. land rig count expectations of 550-575 vs. the 2Q24 average of 583 and the current rig count of 560 as of 6/28 per BKR. Our 2Q24 top-line and EBITDA estimates of $275mm and $93mm roughly align with consensus expectations of $277mm and $94mm, respectively. We are modeling flat sequential q/q revenue in 2Q24, with EBITDA margins retreating -111bps q/q to 33.7% as higher input costs weigh on 1H24 margins, particularly for spoolables. On a segment basis, we see Pressure Control revenue declining -1% q/q with EBITDA margins declining -64bps driven by softer industry activity levels. In Spoolable Technologies, we see a revenue increase of 3% q/q driven by seasonal tailwinds and rising sales to midstream and international customers. We see Spoolable Technology EBITDA margins falling -253bps sequentially to 36.6% as increased input costs flow through the system. That said, we see input costs moderating, and in 3Q24 we are modeling EBITDA of $97mm (in-line with STe $97mm) with EBITDA margins expanding +83bps q/q to 34.5%. Our 3Q24 EBITDA forecast is underpinned by Pressure Control and Spoolable Technology margin assumptions of 34.4% and 38.1%, respectively. We see upside to our Spoolable Technology margin assumption as management has messaged the potential for margins to expand at or above 40%, consistent with 2Q23 to 4Q23 levels."

For an analyst ratings summary and ratings history on Cactus, Inc. click here. For more ratings news on Cactus, Inc. click here.

Shares of Cactus, Inc. closed at $51.23 yesterday.

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