Precision Drilling Corporation (PD:CA), a prominent player in the oil and gas drilling sector, recently sealed a deal on an amended and restated credit agreement worth $375 million, brokered with the assistance of several financial institutions, notably the Royal Bank of Canada.
Effective from June 28, 2024, this agreement aims to augment Precision Drilling’s financial flexibility, reinforcing its operational support and industry competitiveness. But what implications does this hold for investors?
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Will the Enhanced Financial Flexibility Benefit Precision Drilling?
This bolstered financial flexibility could significantly strengthen Precision Drilling’s competitive position in the volatile oil and gas industry. Bolstered liquidity and expanded credit facilities can provide the firm with a wider margin for strategic initiatives, operational expansions, and potential acquisitions, which could subsequently lead to value creation for its shareholders.
Should Investors Buy Precision Drilling Shares?
According to Stock Target Advisor’s analysis, Precision Drilling warrants a “Buy” rating, with a target price of CAD 126.93, indicating a projected price change of 52.25% over the next 12 months. The current stock price is CAD 83.37, suggesting a significant potential upside. Furthermore, with an average analyst rating of “Strong Buy”, the stock seems to be in a promising position.
Despite recording a short-term performance dip of -0.89% over the past week, Precision Drilling has maintained a positive trajectory over the last year, delivering a capital gain return of 16.21%.
What Does Analyst Coverage Indicate?
Accommodating seven covering Analysts, the stock consistently influences “Strong Buy” recommendations, indicating notable confidence in Precision Drilling’s future performance. The average analyst target price stands at CAD 126.81, suggesting substantial upside potential.
However, the current performance of the “Oil & Gas Drilling” sector on the TSX is not as promising, registering average returns of -6.38% over the past month and -2.24% over the past week.
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Concluding Thoughts:
Precision Drilling (PD:CA) appears poised for an optimistic future with an amended credit agreement enhancing its financial flexibility, positive analyst outlook, and steady financial performance.
In light of these factors, investors seeking exposure to the “Oil & Gas Drilling” sector might find value in exploring Precision Drilling, given its solid financial position and favorable analyst coverage.
Muzzammil is a content writer at Stock Target Advisor. He has been writing stock news and analysis at Stock Target Advisor since 2023 and has worked in the financial domain in various roles since 2020. He has previously worked on an equity research firm that analyzed companies listed on the stock markets in the U.S. and Canada and performed fundamental and qualitative analyses of management strength, business strategy, and product/services forecast as indicated by major brokers covering the stock.
