Hunting under pressure as JPMorgan downgrades to 'underweight'
JPMorgan Cazenove downgraded Hunting to ‘underweight’ from ‘neutral’ and slashed its price target to 338p from 518p.
FTSE 250
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16:49 17/05/24
FTSE 350
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FTSE All-Share
4,584.23
17:09 17/05/24
Hunting
438.00p
16:40 17/05/24
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It said Hunting has been positioning itself for a recovery in US market activity. However, JPM reckons 2016 will see another year of capex cuts and now anticipates a slower US activity recovery.
The bank said it expects US onshore rig count to decline by 17% on average in 2016.
“We think the slower recovery in market activity will require Hunting to take additional measures to protect the health of its balance sheet. We think Hunting may need to pull all possible levers including slowing down capex, reducing working capital and cutting its dividend.”
It noted that the company has already confirmed a cut to its interim dividend but JPM expects additional actions may be needed to maintain balance sheet health through a more prolonged downturn.
As a result, the bank sees material earnings downgrade risks from 2016 on and expects Hunting’s share price to remain under pressure as investor expectations reset to another year of declines in earnings per share.
At 1020 BST, Hunting shares were down 7.6% to 435.50p.