ProPetro awarded ‘Buy’ rating in initial coverage from Bank of America

Bank of America has initiated sum connected ProPetro (NYSE:PUMP) with a 'Buy' standing and a terms nonsubjective of $18, citing a operation of cyclical betterment successful oilfield services and longer-term maturation successful powerfulness infrastructure.

Shares of ProPetro traded up astir 3% astatine $15 connected Monday afternoon.

The bank’s analysts judge ProPetro is good placed for a betterment successful hydraulic fracturing, oregon “Completions,” enactment aft a anemic play expected to bottommost successful 2026.

At the aforesaid time, Bank of America expects a turning constituent described arsenic an “inflection,” successful the company’s PROPWR concern opening successful the 2nd fractional of 2026. This conception focuses connected providing powerfulness procreation and related infrastructure, including for lipid and state operations and information centers.

The analysts expect this operation to reshape the company’s net illustration implicit time. While ProPetro presently generates each of its net from Completions, Bank of America forecasts that by 2030 astir 39% of adjusted EBITDA could travel from the powerfulness segment, reducing reliance connected the much volatile oilfield services cycle.

Overall, the steadfast projects gross and adjusted EBITDA to turn astatine compound yearly rates of 15% and 35%, respectively, from 2026 done 2030. Its adjusted EBITDA estimates for 2027 and 2028, $365 cardinal and $520 million, are importantly supra consensus, reflecting a stronger expected betterment successful completions activity.

Cash travel from the bequest concern is expected to money overmuch of the expansion. The analysts estimation escaped currency travel from Completions volition summation from $94 cardinal successful 2026 to $170 cardinal successful 2027 and $270 cardinal successful 2028, which they accidental should let ProPetro to standard its powerfulness operations without taking connected important further debt.

Bank of America besides pointed to execution successful the powerfulness segment, noting the institution has assembled an experienced squad and has already secured contracts, including a semipermanent statement tied to a 60-megawatt information center. The steadfast expects the part to make adjusted EBITDA of astir $9 cardinal successful 2026, rising to $94 cardinal successful 2027 and $158 cardinal successful 2028 arsenic much capableness is deployed.

Despite a astir 54% emergence successful the banal truthful acold this year, the bank’s analysts judge its valuation remains comparatively debased compared with peers, trading astatine a discount connected guardant EBITDA multiples.

They spot the wide setup arsenic offering an “attractive risk/reward,” portion highlighting risks including prolonged weakness successful lipid prices, execution challenges successful scaling the powerfulness business, and the company’s attraction successful US shale regions.