Cactus downgraded to Underperform at BofA on ‘valuation discomfort’

As previously reported, BofA downgraded Cactus to Underperform from Neutral with a price target of $47, up from $46. While stating the firm “really likes” Cactus’ Pressure Control business and growth opportunity in Spoolables, the firm struggles to find enough free cash flow yield versus its peers, the analyst tells investors. Cactus shares have risen 60% since its recent trough at the end of May, notes the analyst, who says the firm’s downgrade to Underperform “primarily reflects our valuation discomfort,” principally on the company’s inability to generate superior free cash flow relative to its capital light peers.