Target Hospitality Posts Loss in Q1; Shares Up

Target Hospitality Corp. (TH) reported a loss in the first quarter. The company is the largest provider of specialty hospitality accommodations and value-added hospitality services in the U.S. Shares of the company rose almost 2% on May 24.

The company incurred a loss of $0.14 per share in Q1, compared to earnings of $0.06 per share in the year-ago quarter.

Revenue generated in the quarter was $45.5 million, which declined 36.5% from the year-ago period. However, the figure was above the consensus estimate of $40.93 million.

Target Hospitality President and CEO Brad Archer said, “The continued momentum in customer activity and demand provides confidence in the cadence for the rest of 2021 and into 2022. Additionally, the new partnership within our Government Services segment is off to a strong start and demonstrates Target’s rapid operational flexibility and scale.”

Archer further added, “As the economic outlook continues to improve, we anticipate this momentum to continue, which will provide the backdrop for meaningful near-term debt reduction and further strengthening of Target’s financial position through the balance of 2021 and into next year.” (See Target Hospitality stock analysis on TipRanks)

The company expects an increase in revenue in 2021, given its high number of completed contracts. For full-year 2021, the company now expects revenues to come in the range of $260-$270 million versus the previous expectations of $235-$245 million. The consensus estimate is pegged at $251.5 million.

Following the earnings announcement, Oppenheimer analyst Scott Schneeberger assigned a Hold rating on Target Hospitality.

Schneeberger commented, “Favorably, Target noted progressively increasing 1Q21 activity among its top ten Permian Basin customers and is optimistic regarding the potential of its new Government Services contract, which is already operating at its optimum capacity. “

He added, “We’re raising our 2021E revenue/adjusted EBITDA to the midpoints of guidance anticipating a progressive Permian Basin build over the balance of the year.”

The rest of the Street is cautiously optimistic about the stock with a Moderate Buy consensus rating. That’s based on 1 Buy versus 2 Holds. The average analyst price target of $3.25 implies 10.5% upside potential to current levels. Shares have increased 43.4% over the past year.

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