GEOS - Geospace Technologies Will Likely Move Sideways For Now (Rating Downgrade)

2024-05-22 10:30:24 ET

Summary

• GEOS' oil & gas business underperformed in Q2 due to slow project execution and lower fleet utilization, putting pressure on its topline and margin.
• Despite short-term challenges, GEOS' growth potential in the offshore industry and focus on adjacent and emerging markets should help stabilize revenues.
• The stock is reasonably valued compared to peers, but the deferral of large rental projects and negative cash flows may impact near-term performance.

GEOS Will Get Past The Current Slowdown

I discussed Geospace Technologies Corporation ( GEOS ) in the past, and you can read the last article here , published on January 4. In Q2, its oil & gas business underperformed due to the slow execution of projects and lower utilization of the marine OBX rental fleet. Operators' lack of capex commitment following the emphasis on shareholder returns will pressure GEOS' topline and margin. Cash flow turning south in 1H 2024 is another matter of concern for the investors....

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