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LandBridge Co LLC (NYSE:LB) shares tanked in early trading on Tuesday and have been volatile since then, after the company's IPO last month.
Here are some key analyst takeaways from their initial coverage.
Analyst John Mackay initiated coverage with a Buy rating and price target of $35.
LandBridge's New Mexico-Texas Stateline acreage is poised to "capture continued Permian Basin growth, notably for produced water disposal," Mackay said in a note.
The company has a unique business model with minimal requirements for operating and capital expenditure, which allows high free cash flow conversion, he added.
LandBridge has "material upside opportunities on its acreage beyond servicing traditional oil and gas demand, particularly data centers and solar farms," the analyst wrote.
There are catalysts over the next few months, "including potential upside to produced water market share growth, more formal details around data center LOI announcements, and the possibility of a dividend payment given the company's noted intention per its most recent S-1 filing," he further stated.
Check out other analyst stock ratings.
Analyst Mark Lear began coverage with a Neutral rating and price target of $30.
LandBridge has a "capital light" business model, with a substantial net mineral acre position in the Delaware Basin, which has been among the strongest domestic oil and natural gas production regions over the past decade, Lear said in a note titled "Delaware Basin Today, Data Center Play Tomorrow."
The company is riding the data center wave, with potential in West Texas from tighter Federal regulations on flaring excess gas, which allows for cheaper power generation, the analyst stated.
"Just prior to the IPO, LB finalized an agreement with Five Point to lease ~2,000 acres to build the initial data center and associated support infrastructure, that ultimately has the potential to generate $30m-40m of annual FCF," he further wrote.
LB Price Action: Shares of LandBridge had declined by 2.20% to $28.85 at the time of publication on Tuesday.
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