Zinger Key Points
- Liberty Energy upgraded to Overweight by Morgan Stanley, with a price target raised to $25, driven by growth in Power Gen Services.
- Analyst Daniel Kutz highlights potential for frac supply attrition and gas demand support, boosting LBRT’s earnings prospects.
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Liberty Energy Inc. LBRT shares are trading higher on Thursday after Morgan Stanley analyst Daniel Kutz upgraded the stock from Equal-Weight to Overweight and raised its price forecast from $20 to $25.
The analyst’s bullish stance reflects the earnings potential from the new Power Gen Services (PGS) business, and the company doesn’t appear to be receiving full valuation recognition for these investments.
Also, the fundamentals of the CS business might be reaching a floor, as the market could be underestimating the potential for frac supply attrition, while gas demand growth should eventually provide support for activity and pricing, adds the analyst.
Additionally, Kutz highlights that the company offers an attractive play on data center and power demand growth at a reasonable price.
LBRT’s leadership has a strong track record of prudent capital allocation and timely investments, adds the analyst.
Apart from this, Kutz says that the concerns about the durability of PGS earnings, such as contracting, utilization, competition, and EPS/FCF, seems to be overstated.
Price Action: LBRT shares are up 3.76% at $16.00 at the last check Thursday.
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