Raymond James has revised its price target for Select Water Solutions (WTTR, Financial), reducing it from $19 to $16, while maintaining a Strong Buy rating. According to a research note, the company exhibited robust performance at the year's outset. This success was fueled by significant contributions from its Water Services and Chemical Technologies segments. However, the firm faced a minor shortfall in its Water Infrastructure results, which were slightly below expectations. Despite this, Raymond James remains optimistic, highlighting substantial growth potential for Select Water Solutions.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 5 analysts, the average target price for Select Water Solutions Inc (WTTR, Financial) is $16.20 with a high estimate of $18.00 and a low estimate of $12.00. The average target implies an upside of 109.84% from the current price of $7.72. More detailed estimate data can be found on the Select Water Solutions Inc (WTTR) Forecast page.
Based on the consensus recommendation from 5 brokerage firms, Select Water Solutions Inc's (WTTR, Financial) average brokerage recommendation is currently 1.6, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Select Water Solutions Inc (WTTR, Financial) in one year is $9.39, suggesting a upside of 21.63% from the current price of $7.72. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Select Water Solutions Inc (WTTR) Summary page.
WTTR Key Business Developments
Release Date: May 07, 2025
- Revenue Growth: Increased by 7% in Q1 2025.
- Adjusted EBITDA: Increased by 14% in Q1 2025.
- Gross Margin: Improved by 1 percentage point; Water Infrastructure maintained a 54% gross margin.
- Net Income: Grew by $12 million in Q1 2025.
- SG&A Expenses: Reduced by 6% to $37 million, under 10% of revenue.
- Water Services Revenue Growth: Increased by 8% in Q1 2025.
- Chemical Technologies Revenue Growth: Increased by 21% in Q1 2025.
- Free Cash Flow Conversion: Water Services and Chemical Technologies segments converted 70% or greater of gross profit to free cash flow.
- CapEx: Approximately $48 million spent in Q1 2025; full-year expectation increased to $225-$250 million.
- Adjusted EBITDA Guidance for Q2 2025: Expected to be $68 to $72 million.
- Interest Expense: Expected to remain in the $4 to $5 million range per quarter.
- Effective Tax Rate: Expected to stay in the low 20% range.
- Free Cash Flow Expectation: Adjusted to a 5% to 15% conversion rate relative to adjusted EBITDA for 2025.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Select Water Solutions Inc (WTTR, Financial) reported a 7% increase in revenue and a 14% rise in adjusted EBITDA for the first quarter of 2025.
- The company achieved strong revenue growth of 21% in chemical technologies and 8% in water services, maintaining a robust 54% gross margin in water infrastructure.
- Several new agreements were signed for large gathering, recycling, distribution, and disposal projects, significantly adding to the company's contracted and dedicated acreage position.
- The company successfully converted a 40-mile freshwater pipeline to transport produced water, integrating it into their expanding northern Delaware network.
- Select Water Solutions Inc (WTTR) executed an agreement to expand infrastructure on the central basin platform recycling project, adding significant acreage dedication and pipeline buildout.
Negative Points
- Revenue from legacy freshwater pipeline assets was modestly down sequentially, impacting overall revenue.
- The company anticipates a potential impact from lower commodity prices and supply chain dislocations due to tariff and trade-related uncertainties.
- There is an expected 5% to 10% revenue decline in the second quarter for water services due to decreased traditional freshwater sourcing sales and legacy trucking revenues.
- Interest expense increased due to incremental borrowings under the new sustainability-linked credit facility.
- The company adjusted its free cash flow expectation for the year to a 5% to 15% conversion rate relative to adjusted EBITDA, reflecting increased capital expenditures.
