ATB Capital Markets Resumes Calfrac Wells Services Ltd. (CFW:CN) at Sector Perform (3)

ATB Capital Markets analyst Tim Monachello resumes coverage on Calfrac Wells Services Ltd. (CFW:CN) with a Sector Perform (3) rating and a price target of $4.25.

The analyst comments "The ATB Take: We resume coverage of Calfrac Well Service Ltd with a $4.25 price target and a Sector Perform rating. While we believe CFW offers strong medium-to-long-term upside potential as it has significantly de-risked its balance sheet (1.4x net leverage at year-end 2025) and its H1/25 results showcased the potentially transformational upside of its Argentina operations; we believe CFW’s 2026 outlook is somewhat tenuous amid sub-US$60/bbl WTI, and as pipeline constraints in Argentina are likely to temper activity until late-2026 or 2027. Further, we believe upside realization remains dependent on CFW’s ability to demonstrate improving North American activity and margins in H1/26 and visibility to more consistent activity levels in Argentina where earnings volatility has been extreme. In addition, we believe CFW will remain focused on deleveraging over the next 12-18 months, which will likely limit its ability to both initiate shareholder returns and to deploy significant resources to strategic growth initiatives. CFW trades at 3.0x|2.7x EV/EBITDAS with 22%|29% FCF yield in 2026e|2027e (13%|20% on EV)."

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