Liberty Energy Inc. (LBRT): A Bull Case Theory

We came across a bullish thesis on Liberty Energy Inc. on Valueinvestorsclub.com by Mason. In this article, we will summarize the bulls’ thesis on LBRT. Liberty Energy Inc.'s share was trading at $17.10 as of December 17th. LBRT’s trailing and forward P/E were 15.90 and 22.17 respectively according to Yahoo Finance.

Liberty Energy & Power (LBRT) is evolving from a North American cyclical oil pressure-pumper into a significant player in behind-the-meter (BTM) power solutions, targeting large, always-on loads like data centers. Its management recently highlighted an ambitious plan to exceed 1 GW of contracted power capacity by 2027, which could rise toward 2 GW as contracting accelerates.

Despite this, the market continues to value LBRT primarily as a cyclical oil services business, leaving the stock materially below its 2024 highs. Once the Power segment secures initial contracts, the market is expected to ascribe a higher multiple to this recurring, long-duration revenue stream, similar to the “time-to-power” rerating seen in comparable companies.

LBRT’s Power platform is a turnkey “power-as-a-service” offering, combining natural-gas genset procurement, installation, fuel logistics, 24/7 monitoring, and maintenance under multi-year contracts, with a clear moat from decades of field operations, vendor relationships, rapid deployment capabilities, integrated fuel logistics, and proprietary software balancing cost and reliability. Strategic alliances, including with Oklo for future SMR upgrades, enhance the long-term growth pathway. The urgency for BTM solutions is reinforced by grid constraints, supply chain pressures on gas turbines, utility rate inflation, and regulatory incentives for peak load management.

The core oil services business remains resilient, with capital discipline and strong ROIC supporting cash flow, providing a stable foundation as the Power business scales. Valuation analysis separates the two segments: the Power platform at 10x 2027 EBITDA and the core business at 6x through-cycle EBITDA yield a YE27 target price of $33+, representing a potential 2x return. Key catalysts include signing initial power contracts, which could trigger a substantial stock rerating, while downside risks mainly involve oil price declines and execution risk in contracting power capacity, both of which appear manageable. LBRT presents a compelling multi-catalyst investment with asymmetric upside.

Previously we covered a bullish thesis on Halliburton Company (HAL) by Buffet_fromTemu in October 2024, which highlighted potential profits from increased drilling activity and geopolitical tensions, supported by a solid core business. The company's stock price has been flat since our coverage, but the thesis still stands. Mason shares a similar perspective but emphasizes Liberty Energy Inc.'s (LBRT) growth through behind-the-meter power solutions and multi-year contracts.

Liberty Energy Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 44 hedge fund portfolios held LBRT at the end of the third quarter which was 37 in the previous quarter. While we acknowledge the potential of LBRT as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.