WTTR Will Benefit From Lithium Extraction And Share Repurchase Tailwinds

Analysts have modestly trimmed their price target on Select Water Solutions to $16.00 from $18.00, reflecting a more cautious view on margins and near term profitability, even as expectations for revenue growth and long term earnings multiples have edged higher.

Analyst Commentary

Recent Street research on Select Water Solutions reflects a nuanced but generally constructive backdrop, with bullish analysts emphasizing the company’s improving execution and upside potential relative to current valuation.

While some firms have shifted to a more neutral stance based on the view that the shares now fairly discount near term fundamentals, others see room for further appreciation as operational momentum builds and earnings visibility improves into 2025 and 2026.

Bullish Takeaways

Bullish analysts highlight that the raised $16 price target implies meaningful upside from current levels, arguing that the stock still trades at a discount to its long term earnings and cash flow potential.
They point to solid Q3 execution, with Water Infrastructure and Water Services profitability tracking within guidance and Chemical Technologies outperforming, as evidence that management can deliver against, and occasionally exceed, Street expectations.
New product traction within Chemical Technologies is seen as an underappreciated growth driver that can support higher margins and justify a premium multiple relative to historical trading ranges.
Improved Q4 guidance versus prior consensus is viewed as a positive signal for near term earnings momentum, which bullish analysts believe could serve as a catalyst for further estimate revisions and multiple expansion if sustained.

What's in the News

Updated disclosure shows that, from July 1, 2025 to September 30, 2025, Select repurchased no additional shares under the May 8, 2019 authorization. This program is now fully utilized at 8,031,023 shares for $59.13 million, representing 8.87% of shares outstanding (company filing).
The company also reports no repurchases during the same period under its March 21, 2023 buyback. This authorization is now fully utilized at 6,166,788 shares for $45.06 million, or 5.7% of shares outstanding (company filing).
A separate update confirms completion of the February 20, 2024 buyback program at 530,912 shares for $3.82 million, representing 0.51% of shares outstanding, with no activity in the latest quarter (company filing).
Select and Mariana Minerals have broken ground on a produced water lithium extraction facility in Joaquin, Texas, targeting up to 3,000 metric tons per year of high purity lithium salts using Select’s existing water network, with commercial production planned for the first half of 2027 (company press release).
Management highlights the lithium project as a key example of its strategy to repurpose existing water infrastructure to create higher return, AI enabled critical minerals assets that leverage oil and gas waste streams for incremental shareholder value (company press release).

Valuation Changes

Fair Value: Reduced from $18.00 to $16.00, representing a modest downward revision in the intrinsic value estimate.
Discount Rate: Lowered from 8.12% to approximately 7.45%, reflecting a slightly reduced perceived risk profile or cost of capital.
Revenue Growth: Revised from an expected decline of about 2.0% to a modest increase of roughly 0.4%, indicating a more constructive topline outlook.
Net Profit Margin: Reduced from approximately 6.88% to about 2.76%, marking a significant cut in projected profitability despite higher revenue assumptions.
Future P/E: Raised from about 29.9x to roughly 55.4x, implying a substantially higher valuation multiple on forward earnings despite lower margin expectations.

Select is positioned for substantial recurring revenue and margin expansion due to superior infrastructure growth, unique business models, and operational leverage across geographies.
Regulatory pressures, water scarcity, and electrification trends will drive premium pricing, new revenue streams, and strong long-term cash flow opportunities.
Heavy dependence on oil and gas, regulatory and customer risks, and required tech investment threaten future growth, margins, and cash flow stability.

Catalysts

About Select Water Solutions

Provides water management and chemical solutions to the energy industry in the United States.What are the underlying business or industry changes driving this perspective?

Analyst consensus expects 15 to 25 percent water infrastructure revenue growth, but current contract wins, rapidly compounding dedicated and ROFR acreage, and the ongoing shift of customer-owned infrastructure to Select could drive segment growth well above 25 percent annually for multiple years, leading to sharply higher recurring revenue and gross margin gains as infrastructure utilization accelerates.
Analysts broadly agree that recent investments in Colorado will bring stable, high-margin growth, but this segment appears poised to deliver even greater earnings upside; Select's early-mover advantage and unique water banking model position it to dominate western US municipal, agricultural, and industrial water management, tapping into a multi-decade, inflation-protected, contracted revenue stream with outsized cash flow conversion.
The pace of water scarcity and ESG-driven regulations is intensifying faster than expected, creating a supply-demand imbalance that will enable Select to command premium pricing for advanced recycling and full-cycle solutions, translating directly into margin expansion and pricing power well ahead of current projections.
Select's newly fortified market-leading platform in solids management and oil reclamation in the Bakken, paired with its integrated water and waste infrastructure footprint, creates operational leverage and a new, high-margin revenue stream that could materially increase consolidated EBITDA and reduce cyclicality.
The soon-to-be standalone Peak Rentals distributed power business, with exclusive battery storage partnerships and deep customer integration, is positioned for hyper-growth as US oilfield electrification accelerates, potentially yielding a significant windfall from recapitalization or IPO while preserving Select's economic upside and supporting higher EPS growth.

Select Water Solutions Earnings and Revenue Growth

Select Water Solutions Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

This narrative explores a more optimistic perspective on Select Water Solutions compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
The bullish analysts are assuming Select Water Solutions's revenue will decrease by 2.0% annually over the next 3 years.
The bullish analysts assume that profit margins will increase from 2.3% today to 6.9% in 3 years time.
The bullish analysts expect earnings to reach $94.4 million (and earnings per share of $0.9) by about September 2028, up from $33.0 million today. The analysts are largely in agreement about this estimate.
In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 29.9x on those 2028 earnings, up from 26.5x today. This future PE is greater than the current PE for the US Energy Services industry at 15.0x.
Analysts expect the number of shares outstanding to grow by 1.06% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 8.12%, as per the Simply Wall St company report.

Select Water Solutions Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

The accelerating transition to renewable energy and the possibility of long-term fossil fuel demand decline threaten Select Water Solutions' entire business model, which is heavily tied to oil and gas production, risking long-term erosion of revenues and future growth opportunities.
Increasing regulatory pressure and stricter environmental legislation around water usage, disposal, and fracking could significantly raise Select's compliance and operating costs, negatively impacting net margins and future earnings.
Persistent customer concentration among a small set of large E&P clients exposes the company to substantial contract renegotiation and revenue volatility risk, especially during periods of low drilling activity, which could sharply impact topline and cash flow stability.
High ongoing capital intensity for infrastructure projects means that if future growth contracts or asset utilization slow due to market trends or operator adoption of water reuse/recycling, Select may face a strain on free cash flow and greater balance sheet risk, putting long-term earnings under pressure.
Secular shifts in the industry, such as customers increasingly adopting closed-loop systems, water recycling, automation, and digital oilfield solutions, may commoditize Select's legacy services and force heavy investment in new technology, impacting net margins and dampening long-term competitive advantage.

Valuation

How have all the factors above been brought together to estimate a fair value?

The assumed bullish price target for Select Water Solutions is $18.0, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of Select Water Solutions's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $18.0, and the most bearish reporting a price target of just $10.0.
In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be $1.4 billion, earnings will come to $94.4 million, and it would be trading on a PE ratio of 29.9x, assuming you use a discount rate of 8.1%.
Given the current share price of $8.41, the bullish analyst price target of $18.0 is 53.3% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystHighTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystHighTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystHighTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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