Investing.com - Barclays raised its price target on Atlas Energy Solutions Inc (NYSE:AESI) to $12 from $11 while maintaining an Underweight rating on the stock. Shares currently trade at $12.44, and according to InvestingPro analysis, the stock appears undervalued at current levels -- placing it among companies on the Most Undervalued list.
The firm increased its estimates following Atlas Energy's announcement of a five-year power purchase agreement on 120 megawatts, expected to generate approximately $50 million to $55 million in adjusted free cash flow on an annualized basis. Barclays said the deal implies more than $400,000 in EBITDA per megawatt, reflecting strong demand for distributed power equipment.
Atlas Energy guided first-quarter 2026 EBITDA lower to $26 million to $30 million, down from approximately $37 million previously, citing higher costs in the proppant business. The company introduced second-quarter 2026 EBITDA guidance of approximately $50 million, slightly above the $48 million consensus estimate. For context, the company posted EBITDA of $179.6 million over the last twelve months, though it remains unprofitable with EPS of -$0.41.
Management said it is seeing the beginnings of increased customer demand. The new power purchase agreement is expected to positively impact estimates beginning in 2027, with the stated annualized free cash flow implying EBITDA per megawatt higher than the $300,000 Barclays had been assuming.
Barclays raised its 2026 and 2027 EBITDA estimates to $192 million and $344 million from $184 million and $295 million. The firm also increased its 2026 estimates despite the first-quarter guidance reduction due to the addition of bridge power this year. For deeper insights into Atlas Energy's financial health and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro for this and 1,400+ other US equities.
In other recent news, Atlas Energy Solutions Inc. has signed a significant 5-year power purchase agreement with a subsidiary of a technology infrastructure provider. The agreement, which includes options for two additional 5-year extensions, will cover half of the 240 megawatts of power generation equipment ordered from Caterpillar Inc. Equipment delivery and construction are anticipated to start later this year, with commissioning expected in the first half of 2027. In a related development, Atlas Energy Solutions has entered into a Global Framework Agreement with Caterpillar for approximately 1.4 gigawatts of power generation assets, valued at around $840 million. These assets are scheduled for delivery between 2027 and 2029, with the company projecting ownership and operation of approximately 2 gigawatts of capacity by 2030.
Following these announcements, RBC Capital raised its price target for Atlas Energy Solutions to $13, maintaining a Sector Perform rating, despite operational challenges in the company's sand operations. Barclays also increased its price target to $11 while keeping an Underweight rating. Meanwhile, Stifel reiterated a Buy rating and set a price target of $14, acknowledging the power generation agreement with Caterpillar. These developments underscore AtlasEnergy Solutions' strategic moves in expanding its power generation capacity.