Strong Performance and Positive Outlook Justify Buy Rating for Natural Gas Services Group

Maxim Group analyst Tate Sullivan has reiterated their bullish stance on NGS stock, giving a Buy rating yesterday.

Tate Sullivan has given his Buy rating due to a combination of factors including the strong financial performance of Natural Gas Services Group and positive market dynamics. The company’s first quarter results for 2024 showcased a significant increase in earnings before interest, taxes, depreciation, and amortization (EBITDA), which exceeded expectations. The growth was primarily driven by the rental of high-horsepower compressor packages and improvements in pricing. Furthermore, the company has successfully raised its EBITDA guidance for the year 2024, indicating confidence in continued strong performance and profitability.
Additionally, despite the static number of rental units year over year, there was a notable increase in the total horsepower of rented units, reflecting a strategic shift towards high-horsepower compressors that command better rental rates. The rental segment’s adjusted gross margin surpassed projections due to higher monthly rental prices, and the overall adjusted gross margin improved year over year. Also, the company’s capital expenditure guidance remains stable, with a focus on adding new equipment only when backed by customer demand. These factors, combined with the stock’s trading at a multiple that Sullivan considers attractive, led to the reaffirmation of the Buy rating and an increased price target.

In another report released yesterday, Stifel Nicolaus also maintained a Buy rating on the stock with a $28.00 price target.

TipRanks tracks over 100,000 company insiders, identifying the select few who excel in timing their transactions. By upgrading to TipRanks Premium, you will gain access to this exclusive data and discover crucial insights to guide your investment decisions. Begin your TipRanks Premium journey today.

Natural Gas Services Group (NGS) Company Description:

Natural Gas Services Group, Inc. engages in the provision of small to medium horsepower compression equipment to the natural gas industry. It focuses primarily on the non-conventional natural gas and oil production business in the United States, such as coal bed methane, gas shale, tight gas and oil shales. The firm manufactures, fabricates and rents natural gas compressors that enhance the production of natural gas wells and provide maintenance services for those compressors. It also manufactures and sell flare systems for oil and gas plant and production facilities. The company was founded on December 17, 1998 and is headquartered in Midland, TX.