Piper Sandler opened coverage on Cactus, Inc. (NYSE:WHD), assigning an Overweight rating and setting a price objective of $73.00. The investment bank framed the call around the company’s execution focus and differentiation of its core offering, arguing these strengths should allow Cactus to grow share while maintaining elevated margins, returns and free cash flow.
In its initiation note, Piper Sandler highlighted Cactus’s balance sheet metrics as evidence of financial resilience. The firm pointed to a debt-to-equity ratio of 0.03 and a current ratio of 5.28 as indicators of minimal leverage and strong near-term liquidity.
The analyst team also underscored the role of prior and recent acquisitions in shaping the investment case. Piper Sandler said the FlexSteel purchase completed three years ago strengthened the thesis and that the company is entering a new phase of transformative growth through international expansion tied to its recent SPC acquisition.
At the same time, Piper Sandler acknowledged that Cactus continues to operate in an environment affected by tariffs. The firm expressed confidence in the management team’s ability to execute against its plans and to optimize margins across both U.S. Land and international markets despite those headwinds.
Piper Sandler derived the $73.00 price target by applying a multiple of 12 times its estimate of EBITDA for 2027, and noted an expectation that the company will revert to its historically elevated valuation. At the time of the initiation Cactus was trading at $56.63 and carried a market capitalization of $4.52 billion. The stock has risen roughly 35% over the past six months.
Separately, Cactus recently closed on the acquisition of a majority interest in Baker Hughes Company’s Surface Pressure Control business. Financial terms of that transaction were not disclosed. Piper Sandler indicated the deal is expected to expand Cactus’s geographic footprint and open additional growth markets.
On the financing side, Cactus amended its existing credit agreement to add a delayed draw term loan facility of up to $100 million. The amendment, completed with JPMorgan Chase Bank and other lenders, permits the Cactus Companies to draw from the facility up to two times within six months, subject to specified conditions.
Coinciding with the closing of its joint venture with Baker Hughes, Cactus granted one-time restricted stock units to certain executive officers. The RSUs, effective January 1, 2026, were awarded to Stephen Tadlock, Jay A. Nutt and Steven Bender and are scheduled to vest over two to three years. These grants were presented as part of the company’s efforts to align leadership incentives with the newly expanded business.
Summary
Piper Sandler’s initiation on Cactus rests on three pillars: low leverage and strong liquidity, the strategic impact of prior and recent acquisitions, and management’s ability to sustain margins while expanding internationally. The $73.00 target equals 12 times Piper Sandler’s 2027 EBITDA estimate, and the firm anticipates a reversion to higher historical multiples.
Key points
- Piper Sandler begins coverage with an Overweight rating and a $73.00 price target for Cactus (NYSE:WHD).
- Balance sheet strength is highlighted by a debt-to-equity ratio of 0.03 and a current ratio of 5.28, indicating minimal leverage and strong liquidity.
- Recent M&A - including the FlexSteel acquisition three years ago and the majority interest in Baker Hughes’s Surface Pressure Control business - is central to the firm’s growth thesis and international expansion plans.
Risks and uncertainties
- Tariff-related pressures remain a headwind and could complicate margin optimization in both U.S. Land and international markets.
- The financial terms for the Baker Hughes Surface Pressure Control transaction were not disclosed, which leaves near-term cash and integration implications less transparent.
- Draw conditions on the new delayed draw facility of up to $100 million introduce conditional financing flexibility that depends on lender terms and specified triggers.
The company indicated it will provide formal financial guidance for the newly acquired business later in the first quarter of 2026.