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.