Hunting gushes higher on Credit Suisse upgrade

Hunting surged as Credit Suisse upped its stance on the stock to ‘outperform’ from ‘neutral’ and lifted the price target to 575p from 500p saying the company is turning a corner.

CS said that with greater exposure to well completions and US unconventionals, Hunting should have more operational leverage to this recovery cycle than 2009.

“The recent improvement in orders suggests customers have consumed excess inventories of certain product lines. Rig count (up more than 50% from the bottom across major basins) and drilled but uncompleted completion trends add substance to this thesis, while a Trump administration should also be a boon to the US Oil & Gas Industry. All this suggests a brighter outlook for HTG.”

In addition, the bank pointed out that Hunting has made good progress cutting net working capital and net debt through the downturn.

It noted the share placing in late October raised over £70m of gross proceeds, eliminating group net debt.

“This enables HTG to better respond to growing business development opportunities while providing even greater headroom to banking covenants. It also removes a barrier to HTG potentially participating in industry consolidation.”

At 1015 GMT, the shares were up 7.6% to 545.50p.