ProFrac’s Inventory Is Climbing. Analyst Initiations of the Firm Are Bullish.

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ProFrac Holding listed its shares on May 13 with an offer price of $18 per share.

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shares of

ProFrac Holding

Soared higher on Tuesday after several analysts began coverage of the oilfield services company on a buy, with one analyst citing “the industry is entering a bull market.”

ProfFrac (Ticker: PFHC) stock was up 12.6% on Tuesday, up about 25% from its IPO offering price to $22.75. The company listed its shares on May 13 with an offer price of $18 per share.

Seaport Research Partners analyst Tom Curran has begun coverage of

ProFrac

with a buy rating and a price target of $26.

He says that “industry frac capacity utilization should remain very high into 2023 and support pricing power due to rising demand – with an expected rising demand for US shale oil resulting from OPEC+’s ongoing struggle to reduce production years from now to increase reservoir malnutrition.”

MorganStanley

Analyst Connor Lynagh initiated coverage of ProFrac at Overweight, saying in a research note that “after significant industry consolidation and capacity reductions in 2019-22, the industry is entering a bull market.”

“We are seeing relatively modest growth in US frac activity given the industry’s tight supply chains, but these issues translate into significant pricing power for companies like PHFC,” added Lynagh. He gave ProFrac a price target of $30.

Both analysts attributed some of their bullish views on the stock to the company’s vertical integration model.

“ProFrac has a multi-offering model that allows the company to realize time and cost savings, protect against supply chain risk, and become technically qualified or, better yet, compete for high-value jobs,” Seaport’s Curran wrote.

“While many competitors have reasonably vertically integrated models, PFHC strikes us as one of the most highly integrated,” added Lynagh. “This provides a full cycle cost advantage as well as greater efficiency in tough times (like today) due to better supply chain control and cost hedging.”

Write to Angela Palumbo at [email protected]