J.P. Morgan Reiterates a Hold Rating on NowBy Jason Carr
“The unwinding of overextended “NAM torque” expectations this earnings season continues. DNOW’s 3Q results were in-line, but the lag in its NAM upstream business (especially to the Permian and adoption cycle of Process Solutions) and drag from offshore (~5-10% of sales v. ~15-20% at peak) began to reset growth expectations (DNOW -15% v. OSX -1.5%). We remain concerned that DNOW’s capacity to fund “all of the above” with respect to working capital and M&A is now contingent on an equity raise (likely concurrent with a deal), as the lack of profitability line-of-sight in a choppier recovery should inhibit the company’s ability to lever the balance sheet further.”
According to TipRanks.com, Meakim is a 4-star analyst with an average return of 4.6% and a 52.2% success rate. Meakim covers the Basic Materials sector, focusing on stocks such as Diamond Offshore Drilling, Oceaneering International, and Frank’s International.
Now has an analyst consensus of Hold, with a price target consensus of $18.
Based on Now’s latest earnings report from March 31, the company posted quarterly revenue of $548M and quarterly net profit of -$63M. In comparison, last year the company earned revenue of $753M and had a net profit of -$224M.
Based on the recent corporate insider activity of 18 insiders, corporate insider sentiment is negative on the stock. Earlier this month, Robert Workman, the President & CEO of DNOW bought 5,609 shares for a total of $157,052.
NOW, Inc. engages in the provision of energy products for industrial applications. Its global product offering includes consumable maintenance, repair and operating supplies, pipe, valves, fittings, flanges, electrical, artificial lift solutions, mill tools, safety supplies, and spare parts under the DistributionNOW and Wilson Export brands. Its supply chain solutions include outsourcing the functions of procurement, inventory and warehouse management, logistics, project management, business process, and performance metrics reporting. It operates through the following geographical segments: United States, Canada, and International. The company was founded on November 22, 2013 and is headquartered in Houston, TX.