Citi analyst Spiro M. Dounis has maintained their neutral stance on ARIS stock, giving a Hold rating on May 8.
Spiro M. Dounis has given his Hold rating due to a combination of factors impacting Aris Water Solutions. The primary reason for the Hold rating is the anticipated slowdown in growth within the Permian Basin, which is expected to result from lower commodity prices. Although management has not yet altered producer schedules, there is a possibility of reduced activity in the latter half of the year. This potential reduction is supported by the expectation that 15% of domestic oil drilling could be at risk if crude prices remain in the high-$50s, leading to potential cuts in capital expenditure and rig counts by several producers.
Additionally, the valuation of Aris Water Solutions is maintained as Neutral, with a target price adjustment from $28 to $26, based on a net present value methodology. This valuation considers a 14% discount rate and a 12% cap rate, implying a 7.5x enterprise value multiple on the estimated 2026 EBITDA. The report also highlights potential downside risks, such as reduced producer activity, increased seismic regulation, federal land exposure, and low trading liquidity, while noting upside risks like increased volumes from commercialization and cost-cutting measures.
M. Dounis covers the Energy sector, focusing on stocks such as Venture Global, Inc. Class A, Oneok, and Targa Resources. According to TipRanks, M. Dounis has an average return of 7.7% and a 61.96% success rate on recommended stocks.
In another report released on May 8, Wells Fargo also maintained a Hold rating on the stock with a $23.00 price target.
