Hunting – group’s latest acquisition sees it going deeper down under, shares 285p, brokers TP 600p.

25.06.2025

Yesterday’s announcement by my favourite oil and gas equipment and services group, Hunting (LON:HTG), concerned the £50m cash acquisition of the Northumberland-based Flexible Engineered Solutions.

From what I can see, this purchase makes an excellent fit into the group’s growing offshore and subsea services portfolio.

The FES deal provides Hunting with access to proprietary subsea fluid transfer technologies and system solutions for the offshore oil and gas and renewable energy industries, which are well-aligned to its current customer base.

It increases its product coverage of deepwater and ultra deepwater markets, which could see the FES services being easily marketed to Hunting’s global customer lists, especially into Brazil, South East Asia, West Africa and into the USA.

Management Comment

Upon the deal Hunting CEO Jim Johnson stated that:

"We are pleased to complete the acquisition of FES. It immediately boosts our subsea portfolio with proprietary products and capabilities and clearly demonstrates progress on our Hunting 2030 Strategy.

FES's fluid transfer solutions perfectly complement our existing subsea and FPSO-related lines, creating strong product bundling and cross-selling opportunities with our existing subsea businesses as well as the potential for further international growth.

FES's blue-chip customer base, international profile and high margin, mission critical applications make the business an ideal fit for Hunting."

The company declared that there are clear opportunities to grow FES in the floating offshore wind sector and that the business has further implemented its Diverless Bend Stiffener Connectors (DBSC) technology to provide a turnkey cable connection system for the offshore renewable market.

The Business

Established in 1874, Hunting is a global, precision engineering group that provides precision-manufactured equipment and premium services, which add value for its customers.

The company maintains a corporate office in Houston and is headquartered in London.

As well as the UK, the company has operations in China, India, Indonesia, Mexico, Netherlands, Norway, Saudi Arabia, Singapore, United Arab Emirates and the USA.

The group reports in US dollars across five operating segments: Hunting Titan; North America; Subsea Technologies; Europe, Middle East and Africa ("EMEA"); and Asia Pacific.

It also reports revenue and EBITDA financial metrics based on five product groups: OCTG, Perforating Systems, Subsea, Advanced Manufacturing and Other Manufacturing.

Analyst Views

Analyst Daniel Slater, at Zeus Capital, rates the group’s shares as a Buy, looking for 450p a share in due course and stating that:

“Overall, we think this looks like a solid acquisition for Hunting.

It represents a bolt-on to the company’s existing business, in a technically advanced and higher-margin segment, with existing profits and a clear path to growth via Hunting’s distribution and customer networks.

Deepwater is also a good place to be, in our view, given the significant developments going ahead in Guyana, potential upcoming developments in Namibia, and potential of a refocus by majors on new projects in the coming years as companies look to refill their development hoppers.”

Updating his current year, to end-December, estimates to show $1,148.3m sales and adjusted pre-tax profits of $96.6m, generating 39.8c in earnings per share and easily covering a 12.7c dividend.

Next year, 2026, could see $1,267.6m revenues, $118.1m profits, 49.0c earnings and a dividend of 14.0c per share.

Alex Brooks, at Canaccord Genuity Capital Markets, is more bullish with a 600p a share Target Price on his Buy rating.

“We continue to see Hunting as materially undervalued given its growing earnings profile, robust balance sheet, transparent financial targets, transformed visibility, and exposure to key secular themes.”

For 2025 he goes for $1,091.1 sales, $92.0m profits and 41c per share in earnings.

In the 2026 year he estimates that the group could report $1,235m turnover, with$129.6m profits, and 58c per share in earnings.

Analysts at Berenberg lowered their target price from 480p to 465p, noting that the business will increase Hunting's gearing to the attractive subsea oil and gas market.

Berenberg now estimates that the subsea oil and gas market will make up 18% of group revenue on its FY26E estimates and highlighted that margins were accretive to the group, while also stating that the outlook for future activity levels remains positive.

In My View

I see the shares of Hunting, which will be announcing its Interim Trading Update on Wednesday 9th July 2025, moving upwards over the coming year or so.

I have been a long-time fan of the group, now looking very cheap at 285p, after rising 8% yesterday on the deal.