On Monday, Goldman Sachs (NYSE:GS) adjusted its stance on Expro Group (NYSE: XPRO), downgrading the stock from Buy to Neutral, while slightly increasing the price target to $23 from $22. The revision follows Expro Group's strong year-to-date performance, which saw the stock climb by 39% compared to the Oil Services Index (OSX).
The firm acknowledged Expro Group's positive international and offshore market exposure but indicated that the stock's recent gains have tempered the potential for further upside. Goldman Sachs pointed out that in the current environment, where small to mid-cap service companies with international leverage have been outperforming, preference leans towards stocks that present immediate catalysts.
Goldman Sachs noted that while Expro Group has specific drivers that could spur growth, these factors are expected to unfold more slowly, except for possible mergers and acquisitions. The company's business, which is oriented towards production, is likely to see more gradual progress.
In conjunction with the downgrade, Goldman Sachs has raised its EBITDA estimates for Expro Group for the years 2024, 2025, and 2026 by 8%, 9%, and 7% respectively. This adjustment comes in the wake of the successful acquisition of Coretrax, whose contributions have now been incorporated into the firm's financial forecasts.
The new price target of $23 implies a 6% upside potential, which is lower than the 19% average upside that Goldman Sachs typically anticipates for stocks with a Buy rating. This new target reflects a more conservative outlook on Expro Group's stock performance over the next 12 months.
InvestingPro Insights
As Expro Group navigates through a period of strategic acquisitions and market exposure adjustments, real-time data from InvestingPro provides a deeper understanding of the company's financial position and market performance. Expro Group's market capitalization stands at $2.57 billion, which is significant for a company in the Oil Services sector. Despite a challenging gross profit margin of 19.07% over the last twelve months as of Q1 2024, the company has shown a revenue growth of 16.35% during the same period, indicating potential for scalability and efficiency improvements in operations.
InvestingPro Tips highlight that Expro Group currently holds more cash than debt on its balance sheet and that net income is expected to grow this year. These factors may provide the company with a financial buffer to execute its business strategies and could be a reassuring sign for investors looking for stability. Additionally, with 3 analysts revising their earnings upwards for the upcoming period, there appears to be a positive sentiment around the company's future earnings potential.
For investors seeking more in-depth analysis and additional InvestingPro Tips, there are 9 more tips available which can be accessed through Expro Group's page on InvestingPro. Utilize the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription and gain valuable insights that could inform your investment decisions.
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