KeyBanc Upgrades Patterson-UTI Energy (PTEN) to Overweight

KeyBanc upgraded Patterson-UTI Energy (NASDAQ: PTEN) from Sector Weight to Overweight with a price target of $35.00.

Analyst Shoemaker commented, "We view Seventy Seven Energy (SVNT) acquisition as positive long-term catalyst. The deal should close in late 1Q17, and we believe SVNT’s high-spec drilling and pressure pumping assets fit seamlessly with PTEN and, importantly, boost the Company’s service capacity at an early stage in the N. American drilling recovery. In addition to targeted $50M of cost savings and synergies in 2017, we expect PTEN will be looking to return idle assets to work and note PTEN/SVNT have some of the highest-quality drilling and pressure pumping assets, which are available to return to service at a lower reactivation cost than the most other equipment sidelined by the downturn. As such, we view PTEN’s operating leverage in the context of a continuing upturn as substantial. We estimate that after acquiring SVNT’s drilling and pressure pumping fleets PTEN’s potential earnings, cash flow, and EBITDA are at least 25-30% greater than they were at the last cycle peak in 2014."

For an analyst ratings summary and ratings history on Patterson-UTI Energy click here. For more ratings news on Patterson-UTI Energy click here.

Shares of Patterson-UTI Energy closed at $27.71 yesterday.

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