In a report released yesterday, John Gibson CFA from BMO Capital maintained a Hold rating on Trican Well Service, with a price target of C$6.00.
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John Gibson CFA has given his Hold rating due to a combination of factors related to Trican Well Service’s recent strategic moves and market positioning. The company’s announcement to acquire Iron Horse Energy Services is expected to bring significant earnings and cash flow per share accretion, thanks to Iron Horse’s low overhead and minimal capital expenditure requirements. This acquisition is anticipated to enhance Trican’s operations by adding more frac spreads and coiled tubing units, with minimal overlap in current operating areas or customer base.
Despite these positive developments, the Hold rating is primarily influenced by Trican’s premium valuation compared to its peers. While the company is recognized as a top-tier pressure pumper in Canada with a strong shareholder return program, the current valuation reflects a Market Perform stance. The analyst acknowledges the potential for increased shareholder returns and earnings growth post-acquisition, but the premium valuation tempers the overall recommendation to a Hold.