UBS has initiated coverage on Acuren Corp. (NYSE: TIC) with a Neutral rating and set a price target of $13.00. The analyst, Joshua Chan, provided a comprehensive overview of the company’s operations and market positioning in his latest commentary.
Acuren Corp. is a recognized leader in the field of nondestructive testing (NDT) and rope access services, primarily catering to the oil & gas sector and other industrial markets. Despite facing challenges in the near term, the company aims to achieve stable growth within historically fluctuating end markets. Chan noted that Acuren is expected to maintain mid-single-digit organic growth, with a 5% increase projected for both 2023 and 2024. However, he emphasized that for Acuren to realize this growth, it must outperform its market segment, which will require more evidence of the company’s performance as a public entity to build confidence in its potential.
According to InvestingPro analysis, Acuren maintains strong liquidity with a current ratio of 3.62 but faces profitability challenges in the near term. The company's return on invested capital (ROIC) is currently approximately 8%, which falls short of the 16% average seen across UBS’s coverage. Nevertheless, Chan highlighted that there is an opportunity for Acuren to enhance its ROIC moving forward.
When discussing the company's valuation, Chan compared Acuren to its peers, noting that the stock is trading at approximately 10 times the next twelve months’ (NTM) EBITDA. This valuation is consistent with industry standards, with UBS estimating the NTM+1 EBITDA to be close to $217 million. Based on this analysis, Chan believes that the risk/reward profile for Acuren’s shares is balanced, suggesting that the current stock price accurately reflects the company’s prospects and challenges.
UBS's Neutral rating and $13 price target reflect a cautious outlook on Acuren Corp., with a fair assessment of its potential growth and current market conditions. The stock’s performance will depend on the company's ability to demonstrate stronger performance in the coming quarters, particularly in the face of profitability challenges.
