Liberty Energy Stock Rises After Morgan Stanley Upgrades On ‘Underappreciated’ Valuation, Retail’s Still Bearish

Liberty Energy (LBRT) stock gained 5.2% on Thursday after Morgan Stanley upgraded the stock to ‘Overweight’ from ‘Equal Weight.’

According to TheFly, the brokerage also raised the stock's price target to $25 from $20. The new price target implies a nearly 62% upside to the stock’s Wednesday closing price.

The brokerage noted that against a tepid macro backdrop for North American shale completions markets, it favors "premium players" like Liberty.

Morgan Stanley said that earnings prospects for the company’s new power generation services business seem "underappreciated," and Liberty does not appear to be getting "full (if any) valuation credit for these investments."

Liberty has ramped up investments in its power generation business to meet the rising electricity demand propelled by artificial intelligence data centers.

A report by the Lawrence Berkeley National Laboratory stated that data centers consumed about 4.4% of the total U.S. electricity in 2023 and are expected to consume between 6.7% and 12% by 2028.

Morgan Stanley added that stock is "a way to play the data center or power demand growth theme at an undemanding price."

Liberty had said earlier in March that it had acquired distributed power systems developer IMG Energy Solutions to boost its power solutions business.

Retail sentiment on Stocktwits moved lower into the ‘bearish’ (28/100) territory than a day ago, while retail chatter rose to ‘normal.’

Liberty shares have fallen 18.5% year-to-date (YTD) amid a downturn in the North American oilfield services business. Producers have kept a tight lid on spending amid volatile commodity prices.

The company confirmed Ron Gusek as its Chief Executive Officer in February after former CEO Chris Wright was confirmed as the U.S. Energy Secretary.

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