TechnipFMC ( NYSE: FTI ) -1.4% in Friday's trading despite winning an upgrade to Buy from Neutral with an $18 price target at Citi, citing two key pillars remaining to the bull case even after the stock has outperformed the oilfield services sector during the last six months, which has normalized the stock's multiple on 2023 EBITDA.
First, pricing leverage is improving given a consolidating sector, and success of the company's integrated model and standardization strategy; the market seems to underappreciate this pricing leverage, as new projects should reflect 18%-20% EBITDA margins, which drives the bank's 2024-25 EBITDA outlook 7%-10% above consensus.
Second, Citi said superior returns and free cash flow relative to history, as well as a commitment to enhance cash return, should allow TechnipFMC ( FTI ) to hold a normal multiple into 2025, even as the cycle matures.
TechnipFMC's ( FTI ) underwater solutions give it an edge over its peer companies in the subsea market, RCK Analytics writes in an analysis published on Seeking Alpha .
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TechnipFMC raised to Buy at Citi as two key pillars remain in bull case