On Wednesday, Atlas (NYSE:ATCO) Energy Solutions Inc (NYSE:AESI) had its stock price target raised to $26.00 from $25.00 by Raymond James, with the firm reiterating a Strong Buy rating on the stock. The adjustment follows Atlas Energy's fourth-quarter results, which did not meet expectations due to reduced activity and lower selling prices affecting both proppant sales and logistics.
This resulted in a roughly 6% shortfall compared to Wall Street's EBITDA predictions. The company's earnings per share (EPS) also fell short, influenced by a significantly higher tax rate.
Despite the fourth-quarter performance, Raymond James noted signs of improvement with activity picking up in February. However, the decline in selling price and particularly the weakness in logistics margins led to an estimated standalone EBITDA for Atlas Energy in the range of $315-350 million, below the low-$360 million consensus among analysts.
In a strategic move, Atlas Energy announced the acquisition of Hi-Crush for $450 million. Hi-Crush is recognized as the second-largest capacity producer of Permian frac sand and is notable for its low production costs, second only to Atlas.
This acquisition is set to enhance Atlas Energy's market share to over 30% and expand its reach in the Midland Basin, complementing its existing strong presence in the Delaware Basin.
The acquisition of Hi-Crush is anticipated to be beneficial to Atlas Energy's earnings per share and free cash flow per share. It also comes with a combined EBITDA guidance for 2024 estimated between $425-475 million, indicating a positive outlook for the company's financial performance following the merger.
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