Select Energy Services Is Trading At Meaningful Discount To Water Oriented Peers, Marking Attractive Entry Point, Says Analyst

Raymond James analyst James M.Rollyson initiated coverage on water management solutions provider Select Energy Services Inc WTTR with a Strong Buy rating and a price target of $12.
Select has nearly 3.0 MMBpd of water recycling capacity, nearly 2.7 MMBpd of disposal capacity, more than 1,500 miles of underground pipeline, and other associated equipment/facilities to support its business.
The analyst noted that the company's strong position as a leader in water sourcing, transfer, disposal, and especially recycling positions it well under the growing water needs of the oil patch.
That, coupled with its unique position in the chemicals business, recent organic and M&A-fueled growth, and sharp share price pullback, has driven the analyst to initiate with a Strong Buy rating.
Select's outlook for revenue and EBITDA growth leads sits atop its peers according to consensus estimates, noted the analyst.
The analyst mentioned that WTTR is trading at a meaningful discount to its historical range and the "water" oriented peers.
The free cash flow outlook provides the ability to return additional cash to shareholders, as evidenced by the $50 million repurchase program announcement yesterday.
The analyst said that recent attractively priced M&A transactions drive future growth, and the recent Breakwater deal comes with pre-permitted organic growth opportunities in the Permian.
Price Action: WTTR shares are trading higher by 6.17% at $6.37 on the last check Thursday.

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