On Tuesday, Stifel maintained a Hold rating on Calfrac Well Services Ltd. (CFW:CN) (OTC: CFWFF) with a steady price target of Cdn$5.00. Calfrac Well Services reported lower-than-expected earnings before interest, taxes, depreciation, amortization, and share-based compensation (EBITDAS) of $26 million, missing both Stifel's prediction of $34 million and the consensus estimate of $33 million.
This performance marks a significant decline from the $84 million reported in the first quarter of 2023 and $63 million in the fourth quarter of 2023.
The company's U.S. operations experienced delays in multiple programs within the Rockies region due to weak natural gas prices. Still, there is an anticipation of a transient phase with a notable increase in utilization moving into the second quarter of 2024.
Despite the setbacks, Calfrac has observed encouraging developments in Argentina and is positioned to benefit from potential growth opportunities arising from the economic reforms introduced by the Milei government.
Stifel has projected that Calfrac's shares may underperform in the market today due to the earnings miss. The firm's stance remains cautious in light of the company's recent earnings volatility.
Although the focus of investors is expected to be on the company's North American operations in the near term, Stifel suggests that operational and economic advancements in Argentina might serve as a catalyst for the company in the longer term.
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