This Newly Public Fracking Stock Could Rise Nearly 50%, According To Barclays

It has been reported that Atlas Energy Solutions' stock price may rise in the next year if operations related to fracking in the Permian Basin are expanded, according to Barclays.

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Podhaizer initiated coverage of fracking stock with a price target of 46.8% over the next 12 months from where the stock closed on Friday evening. This means that given the stock's bottomed out at $25 on Friday evening, there is a 46.8% upside target over the next 12 months from where the stock closed Friday evening.

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In the Permian Basin, which is located in the southern part of the United States, Atlas is the only publicly traded company providing integrated services and proppants for the fracking industry. The company specializes in sand and other materials that are used to keep fractures open in order to maintain oil production.

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On Monday, the stock gained 2.5% in price on the New York Stock Exchange following a brief trade. During Tuesday and Wednesday's trading sessions, the stock went up by another 2.5% in price.

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Our firm believes that AESI is the only public proppant provider in the Permian basin that also owns a growing logistics company which is uniquely positioned in the basin. A note Podhaizer wrote to clients on Monday indicated that the company is working on a new conveyor system known as the Dune Express to change the way proppant is distributed throughout the NAM supply chain. It has been a challenging initial public offering for AESI, but it has emerged with its differentiated proppant delivery mode. We see the company in the position of re-rating in the longer term as it proves out its differentiated delivery mode.

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A boom and bust cycle in the proppant market that lasted for years caused an oversupply, according to Podhaizer, as a result of massive capital investments poured into building it up. According to Podhaizer, Covid has caused a trough in pricing, similar to what happened during the "great purge," when weak players and bad actors were eliminated in the pricing industry. After many companies experienced margin declines and bankruptcy, he believes Covid has caused a trough similar to this.

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According to him, the company is now concentrating on capital discipline, rationalization, and consolidation in order to grow and generate cash flow. As a result, supply-and-demand trends have returned to a position that is conducive to growth and cash flow generation, which reduces the need for peers to build out like Atlas, which means that in the Permian Basin there are not as many peers planning on building out like Atlas.

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the deployment of a new truck fleet, the deployment of a highly innovative conveyor called Dune Express, as well as the complete overhaul of Atlas' existing logistics infrastructure, Podhaizer explained. As Podhaizer stated, the company is looking to expand its presence in the basin and also to make the company more efficient at doing so.

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Nonetheless, Allen pointed out that there are a few risks, especially considering the industry's recent turmoil. He also added that investors may not wish to pay for something that isn't built yet, and that they could be wary of margins because it's a commodity market and makes sense to look at margins during this time of uncertainty.