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ProPetro (NYSE:PUMP) and Helmerich & Payne (NYSE:HP) led North American land drillers and frackers higher, +6.1% and +3.4% respectively in Wednesday’s trading, as Benchmark upgraded the stocks to Buy from Hold with respective $16 and $50 price targets, seeing a “tactical trading opportunity” in the group.
Pure-play Permian Basin fracking play ProPetro (PUMP) trades 43% below its average multiple, and no. 1 U.S. land driller Helmerich & Payne (HP) trades 34% below average multiple, Benchmark analyst Kurt Hallead said.
“Everything in this space is primed to work as new long only money looks for a home in the laggards and existing holders add to current positions in the leaders,” Hallead wrote, as he also upgraded Nabors Industries (NBR), Patterson-UTI Energy (PTEN) and Precision Drilling (PDS) to Buy.
The analyst said he expects to see hedge funds that have been long international drillers and short U.S. drillers flipping their positions, but the trade has “a finite life as we expect U.S. land activity/pricing to be flat” in 2024 compared to 2023.
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