Piper Sandler Keeps Overweight Rating on National Energy Services, Raises PT to $13.

Piper Sandler Keeps Overweight Rating on National Energy Services, Raises PT to $13.

Piper Sandler has maintained its overweight rating on National Energy Services Reunited Corp (NASDAQ:NESR) and raised its price target to $13, reflecting positive investor sentiment following the company's Q2 2025 earnings report. The firm's analysts highlighted the company's robust performance and strategic initiatives as key drivers for the rating upgrade.

National Energy Services reported a 8% sequential increase in revenue to $327.4 million, surpassing market expectations. The company's stock price rose 4.25% in premarket trading, reaching $7.60, following the earnings announcement. The positive market reaction underscores investor confidence in the company's growth prospects and strategic initiatives.

Piper Sandler's analysts praised the company's focus on expanding its decarbonization segment and innovative solutions like flare-to-power, which have contributed to its steady growth. The Middle East and North Africa (MENA) region remains a stronghold for National Energy Services, with the company expanding its footprint in Kuwait, Saudi Arabia, and North Africa.

Financial highlights for Q2 2025 include revenue of $327.4 million, an adjusted EBITDA margin of 21.6%, and free cash flow of $68.7 million. The company's net debt stands at $223 million, with a net debt to adjusted EBITDA ratio of 0.74x. The analysts noted that the stock is currently trading below its fair value, presenting a potential opportunity for investors.

Looking ahead, National Energy Services aims to achieve a $2 billion revenue run rate within 18 months. The company expects Q3 2025 revenue to remain consistent with Q2 and projects full-year margins around 22%. Piper Sandler's analysts maintain a solid financial health score of 2.2 (FAIR) for the company, with particularly strong scores in profitability metrics.

During the earnings call, CEO Sherif Fota emphasized the company's focus on profitable revenue growth and free cash flow generation. CFO Stefan Angeli added that the company expects to exit the year at a record run rate for revenue as its growth is expected to continue through 2026. The company is considering potential stock buybacks after the year-end, alongside a planned CapEx of $125-145 million.

Risks and challenges for National Energy Services include supply chain disruptions, fluctuations in oil demand and prices, political instability in the MENA region, and the transition to renewable energy sources. Despite these challenges, Piper Sandler remains optimistic about the company's growth prospects and maintains its overweight rating.

References:
[1] https://www.investing.com/news/transcripts/earnings-call-transcript-national-energy-services-sees-425-stock-uptick-in-q2-2025-93CH-4202418