Tetra's Diversified Future: Lithium, Zinc Bromide, And Water Recycling Poised To Reshape Earnings, Highlights Analyst

Benchmark analyst Kurt Hallead initiated coverage on Tetra Technologies Inc TTI with a Buy rating and price target of $8.

The analyst believes the company is in the early stages of a corporate evolution focusing on the use of lithium in EV battery technology and zinc bromide in long-term battery storage projects to assist wind and solar farms. 

The reuse of produced water from oil and gas operations is also among the key focus areas for TTI, says the analyst.

Hallead estimates the emerging growth opportunities to add $280 million to EBITDA and $8 in equity value.

For the lithium (EV batteries) business, the analyst notes TTI's 40k acres of mineral rights in the Arkansas Smackover Formation. The analyst estimates this business will add $140 million annually to EBITDA by the decade's end.  

For the Zinc Bromide (Energy Storage) business, Hallead cites TTI's existing commercial arrangement with Eos Energy Enterprises Inc EOSE and discussions with firms for supplying patented ultra-pure zinc bromide as positives. The analyst estimates this business to add up to $80 million annually to EBITDA by the decade's end.

For the Produced Water Recycling and Reuse business, Hallead notes TTI's exclusive licensing agreements to recycle and reuse produced water. By the end of the decade, the analyst estimates this business to add $60 million annually to EBITDA.

Overall, the analyst estimates an EBITDA of $114 million in 2023, $132 million in 2024, and $151 million in 2025.

Also, the analyst sees revenues of $643 million in 2023, $683 million in 2024, and $727 million in 2025.

Also Read: Tetra Technologies Expects Q2 Earnings Above Prior Expectations 

Price Action: TTI shares are trading higher by 4.84% at $6.50 on the last check Thursday.