On Thursday, Goldman Sachs (NYSE:GS) initiated coverage on Expro Group (NYSE:XPRO) with a Neutral rating and set a price target of $18.00. The firm provided insights into the current market position of Expro Group, noting that the stock has significantly underperformed, with InvestingPro data showing a steep 45% decline over the past six months.
Currently trading at $11.40, the stock sits near its 52-week low of $11.60. Despite the underperformance, the analyst views the stock as potentially appealing for investors seeking discounted shares, with the condition that consensus estimates undergo a rationalization.
Expro Group's stock is trading at a 34.0x EV/EBITDA multiple based on Goldman Sachs' estimates, which are approximately 4% below the consensus. According to InvestingPro data, the company's actual EV/EBITDA ratio stands at 4.72x, while maintaining a P/E ratio of 79x. The firm suggests that a reassessment and alignment of consensus estimates could serve as a catalyst for the stock to adjust to its historical multiples.
InvestingPro analysis indicates the stock is currently undervalued relative to its Fair Value. The recommendation comes as the analyst perceives the current setup, with downside to consensus estimates, as a challenging environment for the stock's performance.
The analyst's commentary highlights the potential for Expro Group's shares to be reevaluated if the market estimates become more aligned with their own.
This could provide an opportunity for the stock to re-rate accordingly. InvestingPro data reveals that four analysts have recently revised their earnings downward for the upcoming period, though the company maintains a healthy current ratio of 1.98 and operates with moderate debt levels.
For deeper insights into Expro Group's valuation and financial health metrics, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers. Goldman Sachs' position reflects a cautious optimism, acknowledging the risks associated with the current consensus estimates while also recognizing the possibility of a positive shift.
The coverage assumes that there may be an event on the horizon that could clarify the stock's valuation, making it more attractive to investors who are comfortable with its deeply discounted status. The firm's stance is grounded on the premise that the stock's valuation could become more favorable once the market's expectations are adjusted.
In summary, Goldman Sachs has begun monitoring Expro Group with a Neutral stance, anticipating that future adjustments in market expectations could potentially enhance the stock's appeal to certain investors. The price target of $18.00 reflects the firm's current assessment of Expro Group's value in light of these considerations.
In other recent news, Expro reported its Q3 revenue at $423 million, marking a significant 14% increase compared to the previous year. Despite a sequential revenue decline, the company has adjusted its full-year revenue guidance to between $1.72 billion and $1.75 billion. Adjusted EBITDA projections stand between $335 million to $350 million. These recent developments follow Expro's strategic focus on cost-effective solutions and market expansion, positioning it for future growth amid current market volatility.
The company also secured $354 million in new contracts and maintains a backlog of approximately $2.3 billion. Expro's long-term growth is anticipated in international and offshore services, with oil demand expected to outpace supply through 2024. The company is also actively pursuing mergers and acquisitions to enhance customer relevance and is planning a comprehensive review of internal processes to drive margin expansion.
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