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Hawk’s Nest

Unusual Bullish Accumulation in Small-Cap Oil Services Stock

by | Apr 25, 2022

Nextier Oilfield Solutions (NEX) strong small-cap lately which has seen bullish flow including 4000 September $12.50 calls bought and sellers in the September and October puts. NEX has been in a steady channel higher since early 2022 and back at the rising 20-MA with upside to $12 and then out to $14-$15. The $2.77B company provides well completion and production services like hydraulic fracturing services. They operate in the Permian Basin. NEX sees significant opportunity for growth as crude production in the US will be increasingly reliant on shale and more than 50% of global production growth through 2026 will come from US shale. They also note that increased frac intensity and limited supply are setting up historically high equipment utilization.  Shares trade 10X earnings, 1.95X sales, and 25X cash. Short interest is 2%. Analysts have an average target for shares of $10 with a Street High $12. Piper target raised on 4/13 citing higher estimates for the land drillers and pressure pumpers as margin expansion will hold the primary leverage through the 2H of 2022. Stifel positive on the name citing their belief that Russia’s invasion of Ukraine will have long-lasting effects on energy markets, driving higher activity in the U.S. market.