Patterson-UTI upgraded to Buy at BofA after 18% year-to-date decline

As previously reported, BofA upgraded Patterson-UTI to Buy from Neutral with a price target of $16, up from $14. The stock has declined 13% from its recent September 14 peak, underperforming its three U.S.-listed Land Drilling peers and its three U.S.-listed Pressure Pumping peers, notes the analyst, who also points out that the share have fallen 18% on a year-to-date basis. Though in the near-term the firm sees risk to Patterson’s recently stated view that the U.S. Land rig count can increase by about 100 rigs by YE24 and believes the rig count increases 70 rigs from Q4 of 2023 to Q4 of 2024, BofA thinks the U.S. Land rig count can continue to grow in 2025 sees shares trading at an “attractive” 2024 free cash flow yield of 14% and 2025 FCF yield of 18%.