Cactus Gets Barclays Upgrade on Baker Hughes Deal

Cactus, Inc. (NYSE:WHD) has been upgraded by analysts at Barclays from Equal-weight to Overweight, raising the price target to $54 from $51. This revision came after the company, with a market capitalization of $3.019 billion, struck a deal with Baker Hughes Company (NASDAQ:BKR)’s Surface Pressure Control (SPC) business to acquire a 65% stake. This $344.5 million cash transaction also gives Cactus the right the purchase the remaining 35% two years after the deal closes.

No surprise here, the acquisition is part of Cactus, Inc. (NYSE:WHD)’s plan to enhance diversification. As SPC generates around 85% of its revenues from the Middle East region, the largest oil and gas hub, the strategic purchase would allow WHD to enter the market that is expected to be the growth hotspot in the times ahead.

An oil and gas engineer looking at a production tree, inspecting its pressure control equipment.

Additionally, the venture would establish Cactus, Inc. (NYSE:WHD) as a premier and capital-light oilfield equipment manufacturer, allowing the company to enter into a more stable, project-driven market. From earnings clarity to long-term contracts, the deal acts as a value-adding move by the company.

Cactus, Inc. (NYSE:WHD) is a Texas-based company engaging in the design, manufacture, and marketing of engineered pressure control and spoolable pipe technologies. With a presence across the United States, Australia, Canada, and the globe, the core offerings of the company are utilized in the production, gathering, and takeaway pipelines to transport oil and gas, among other liquids.

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Disclosure. None.