Why BofA Believes It's A Good Time To Buy ProFrac

ProFrac Holding Corp. PFHC is well-positioned to benefit from a material rise in fracking profitability through year end and into 2023.

The ProFrac Holding Analyst: BofA Securities' Chase Mulvehill initiated coverage of ProFrac with a Buy rating and a price target of $26.

The Profrac Holding Thesis: Active fracking fleets could increase from the current estimate of around 260 to more than 300 by the end of 2023, Mulvehill said in the note.

“Rising frac intensity, aging equipment coupled with a more consolidated supply base, industry discipline and long lead time for newbuilds has pushed marketed utilization to ≥90% and we expect it to remain at that level over the next 9-12m,” the analyst wrote.

“PFHC is attractively positioned with its vertically integrated model and low capex/opex intensity,” Mulvehill said. Profrac is in a position to acquire companies at low valuations and choose to retire or cannibalize older equipment for spare parts, which would further reduce its capex and opex.

PFHC Price Action: Shares of ProFrac Holding had risen by 0.97% to $22.86 at the time of publication Friday.