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U.S. Pressure Pumping Company Lowers Q4/18 Revenue Guidance
Research Report


A Stifel report explains the reasons behind the guidance revision and shares its 2019 outlook for the oilfield services firm.

In a Nov. 30 research note, analyst Stephen Gengaro reported Liberty Oilfield Services Inc. (LBRT:NYSE) lowered its Q4/18 guidance, and Stifel revised its Q4 numbers accordingly. However, he expressed optimism for next year, adding, "We continue to expect improvement in Q1/19. Our 2019–2020 estimates are unchanged."

Gengaro explained that two Liberty customers had chosen to take equipment offline sooner than expected. As a result, the company's Q4/18 revenue will sequentially decline from previous guidance by about 10%, according to management estimates. That equates to about a mid-single-digit drop.

In addition, due to customers delaying planned activity until Q1/19 for budgetary purposes, Liberty's Q4/18 annualized EBITDA per fleet also is expected to sequentially decrease by about $5–6 million versus the previously guided $3 million.

Liberty attributed the Q4/18 weakness to "transitory takeaway issues and year-end budget management concerns," which Gengaro noted was consistent with Stifel's expectations.

To reflect changes to Liberty's Q4/18 forecast, Stifel reduced its estimates for Q4/18 earnings per share to $0.33 from $0.43 and Q4/18 EBITDA to $86.3 million from $101.8 million, the analyst pointed out. The investment banking firm, however, left all of its current numbers for 2019 unchanged, given that it expects a "ramp-up in activity throughout the next year on higher budget resets and the resolution of Permian takeaway constraints," noted Gengaro.

Stifel also maintained its Buy rating and $25 per share target price on Liberty, whose current share price is about $16.17.


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Disclosures from Stifel Nicolaus & Company, Liberty Oilfield Services Inc., November 30, 2018

I, Stephen Gengaro, certify that the views expressed in this research report accurately reflect my personal views about the subject securities or issuers; and I, Stephen Gengaro, certify that no part of my compensation was, is, or will be directly or indirectly related to the specific recommendations or views contained in this research report. Our European Policy for Managing Research Conflicts of Interest is available at

For a price chart with our ratings and any applicable target price changes for LBRT click here.

Stifel or an affiliate expects to receive or intends to seek compensation for investment banking services from Liberty Oilfield Services Inc. in the next 3 months.

Stifel or an affiliate is a market maker or liquidity provider in the securities of Liberty Oilfield Services Inc..

The equity research analyst(s) responsible for the preparation of this report receive(s) compensation based on various factors, including Stifel’s overall revenue, which includes investment banking revenue.

As a multi-disciplined financial services firm, Stifel regularly seeks investment banking assignments and compensation from issuers for services including, but not limited to, acting as an underwriter in an offering or financial advisor in a merger or acquisition, or serving as a placement agent in private transactions.

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