On Monday, Piper Sandler showed continued confidence in Expro Group (NYSE: XPRO) by increasing the stock's price target from $26.00 to $29.00, while maintaining an Overweight rating. The firm's analyst cited several factors contributing to the optimistic outlook, including management roadshows in Philadelphia, New York, and Boston last week, and the potential for significant margin expansion.
Expro Group, which operates primarily in the offshore oil service sector with approximately 80% of its business offshore and 70% international, is poised for growth. Historical comparisons highlight that FY14 pro-forma EBITDA margins for Frank's/Expro were over 30%, compared to the 20% - 22% guidance for 2024. The company has successfully reduced support costs by approximately 700 basis points and is now witnessing an uptick in net pricing.
The intermediate target for Expro's EBITDA margin is set at 25%, with Piper Sandler expressing that it would not be surprising if the company achieves this level by the end of 2025. Key service lines contributing to this positive outlook include Tubular Running Services, Well Testing, and Subsea Landing Strings.
InvestingPro Insights
For investors considering the potential of Expro Group (NYSE: XPRO), recent metrics and analyst insights from InvestingPro offer a deeper look into the company's financial health and market performance. Notably, Expro Group holds more cash than debt on its balance sheet, which is a solid indicator of financial stability. This is reinforced by the fact that its liquid assets exceed short-term obligations, suggesting a comfortable liquidity position for the company.
Moreover, the company has been experiencing significant returns, with a 36.38% increase over the last six months and a notable 7.93% return just over the past week. These figures underscore a strong market performance that could interest investors looking for growth potential. However, it's important to note that Expro Group has not been profitable over the last twelve months, and it currently trades at a high EBIT valuation multiple, which might be a concern for value-focused investors.
InvestingPro Tips also highlight that analysts have revised their earnings upwards for the upcoming period, and the company is expected to be profitable this year. These insights, alongside a fair value estimate of $29.27 from InvestingPro, higher than the current price, could signal an undervalued opportunity for investors. For those seeking additional insights, there are more InvestingPro Tips available for Expro Group at https://www.investing.com/pro/XPRO. To access these, use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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