Raising ChampionX’s FVE to $33 as Favorable Service Pricing and Demand Persist Into 2023

ChampionX’s fourth-quarter results came in at the lower end of the firm’s guidance, with revenue just shy of $1 billion and adjusted EBITDA of $179 million. Revenue decreased 3% quarter over quarter due to standard seasonal slowdowns as well as divestiture of certain product lines in the firm’s reservoir chemicals business. On a year-over-year basis, fourth-quarter revenue expanded 20% due to a favorable pricing environment and increasing production activity worldwide, two trends we expect will persist in 2023. Following results, we’re raising our fair value estimate to $33 from $25, as a result of our improved outlook regarding the ChampionX’s potential for profitable growth through 2023 and beyond.