On Tuesday, Barclays has raised its outlook on Expro Group (NYSE: XPRO), shifting its rating from Equalweight to Overweight and increasing the price target to $27.00, a significant jump from the previous target of $18.00.
The firm's analysis indicates that Expro Group stands out among its peers in the offshore small to mid-cap (SMid cap) sector due to its robust core businesses in tubular running services (TRS) and subsea well testing.
The firm anticipates that Expro will experience growth in revenue through 2025, driven by increased deepwater rig activity and the adoption of new technology, which is expected to lead to wider profit margins.
Additionally, the well testing services provided by Expro are projected to see increased demand as major oil companies ramp up exploration activities, make more final investment decisions (FIDs) offshore, and seek to prolong the lifespan and production of existing assets.
Barclays' new price target of $27 is based on a 7.0 times multiple of the firm's estimated earnings before interest, taxes, depreciation, and amortization (EBITDA) for the year 2025.
This valuation reflects a more optimistic perspective than the previous 5.0 times EBITDA multiple.
InvestingPro Insights
Barclays' recent upgrade of Expro Group (NYSE: XPRO) to an Overweight rating with a price target of $27.00 echoes the positive sentiment found in some InvestingPro metrics and tips. Notably, Expro Group's revenue growth over the last twelve months as of Q1 2024 is an impressive 16.35%, with a quarterly revenue growth in Q1 2024 of 13.03%. These figures support Barclays' outlook on the company's revenue growth potential through 2025. Additionally, the company has experienced a 26.44% price uptick over the last six months, which is in line with the optimistic view of the stock's future performance.
InvestingPro Tips for Expro Group highlight that the company holds more cash than debt on its balance sheet and liquid assets exceed short-term obligations, suggesting a strong financial position. Moreover, analysts predict the company will be profitable this year, which could be a driving factor behind the recent upgrade and increased price target. For those looking to delve deeper into Expro Group's financial health and future prospects, there are 7 additional InvestingPro Tips available at https://www.investing.com/pro/XPRO. Use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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