BofA Securities has moved Liberty Energy Inc. (NYSE: LBRT) up to a Buy rating from Neutral and lifted its target price to $31 from $20. The upgrade accompanies a forecast that shifts the company toward a more power-centric earnings mix and recognizes potential cyclical upside in its oil and gas completions business.
The stock is trading around $26.23, near its 52-week high of $27.21, and has produced a year-to-date return of 40.3%.
Analyst rationale
Analyst Chase Mulvehill pointed to the structural expansion of Liberty Energy's power segment and to upside in completions as the key drivers behind the rating change. BofA expects Liberty to transform from a company that is currently 100% focused on oil and gas completions into one with a 50/50 split between oil and gas and power in EBITDA by 2030. That projection underpins the firm's decision to reprice the stock and to extend its valuation model.
Financial profile and model changes
Liberty Energy is reported to generate $600.77 million in EBITDA and carries a market capitalization of about $4.28 billion. BofA kept its 2026 and 2027 EBITDA forecasts intact at $465 million and $770 million respectively, figures that represent a 5% shortfall and a 15% premium versus consensus estimates. To reflect the anticipated shift in the business mix, the bank extended its discounted cash flow model to 2030 and lowered its terminal decline rate to 0.1% from 1.1% on the assumption of a higher share of power in 2030 EBITDA.
The analyst's outlook assumes completions activity will hit a trough in 2026 with improvement beginning in 2027 and beyond.
Power buildout and corporate progress
BofA noted Liberty's ongoing work to scale a power business with a target of 3 gigawatts by year-end 2029. The company is advancing commercial agreements, operational capabilities and financing arrangements for the segment, according to the analyst. Separate data flagged by the analyst indicates Liberty operates with a moderate leverage profile and has increased its dividend for four consecutive years; the current dividend yield sits at 1.39%.
Capital markets actions and credit amendment
In a separate development, Liberty priced $700 million of 0.00% convertible senior notes due in 2031, an increase from an initial $500 million announcement. The offering is expected to close on or about February 6, 2026 and will be sold to qualified institutional buyers under Rule 144A. Initial purchasers have an option to buy an additional $70 million in notes within a 13-day period following issuance. The company indicated its intention to use proceeds to bolster its balance sheet and support operations. The equity traded lower in the wake of the convertible note announcement.
Liberty also amended its credit agreement with JPMorgan Chase Bank, N.A., and other lenders to permit a new bridge loan facility of up to $600 million. That amendment allows the company to incur the bridge loan on or before June 30, 2026, with the provision that the bridge loan must mature within 365 days of incurrence.
Market and analyst context
BofA's change in outlook hinges on the company's execution against its power ambitions and on a cyclical recovery in completions activity after a projected trough in 2026. The bank's adjustments to its DCF inputs and terminal assumptions reflect those expectations but are conditioned on the business mix evolving as projected.
Investors will watch execution on the 3 GW target, the expected timing of completions recovery and the use of proceeds from recent capital markets transactions as indicators of the company's ability to deliver the mix and cash flows assumed by BofA.