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Canaccord slashes recommendation for Hunting to 'hold'
Analysts at Cannacord Genuity on Monday downgraded their recommendation for shares of Hunting from 'buy' to 'hold', citing valuation.
Nonetheless, in the same research note, Hunting received a revised target price of 850p, up from 700p, with the Canadian broker noting that the company's shares were up by 66% over the past twelve months, having outperformed the sector by over 50%.
"Whilst we are very aware Hunting is traditionally expensive during the upturn, and we are making further upgrades to our forecasts with this note, we believe the stock is now fairly priced and we are downgrading to HOLD with a new price target of 850p," Cannacord said.
"Beyond the cycle," Cannacord also noted a number of positive changes in the company, including the introduction of own-design perforating guns that are simpler, safer, more reliable and cheaper, as well as more consistent explosive charges.
The company had also been reutilising its excess capacity from the previous cycle, having already managed to remain solvent during the past downturn, and still had available capacity - especially in the US - to use as customers looked to ramp-up activity and re-stock.
Finally, the research note also highlighted Hunting's improved disclosure policy, saying that an "unhelpful" divisional split in the group has been removed, allowing for the identification of the fact that the bulk of its non-US business is a tubular manufacturer and distributor, amounting to roughly 75% of non-US revenue and 30% of total group revenue.
Hunting's dividend per share was seen increasing from zero to $0.08 in 2018 before a further increase to $0.12 the following year.
As of 1547 BST, Hunter's shares were down 6.40% at 804.00p.