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Flotek Industries: Wall Street’s Target and Relative Valuation

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Part 4
Flotek Industries: Wall Street’s Target and Relative Valuation PART 4 OF 7

Flotek Industries’ Stock Price Forecast on August 10

Flotek’s implied volatility 

On August 10, 2017, Flotek Industries’ (FTK) implied volatility was ~56%. Since its 2Q17 earnings were announced on August 1, 2017, Flotek Industries’ implied volatility has fallen from ~58% to the current level. The implied volatility mirrors investors’ views of a stock’s potential price movement.

Flotek compared to its peers

On August 10, Helmerich & Payne’s (HP) implied volatility was ~35%. Precision Drilling’s (PDS) implied volatility was ~67% on the same day, while Helix Energy Solution’s (HLX) implied volatility was 57%. Crude oil’s implied volatility was 27.3% on August 10, 2017.

Flotek Industries’ Stock Price Forecast on August 10

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Implied volatility in the past and now

Since June 30, 2017, Flotek’s implied volatility has remained nearly unchanged at 56%. During the same period, crude oil’s implied volatility remained the same. Flotek accounts for 0.05% of the iShares Core S&P Small-Cap ETF (IJR). IJR has fallen 1% since June 30, 2017—compared to a 33% fall in Flotek’s stock price during this period.

Earlier, Flotek’s implied volatility rose to 91% on December 7, 2016, following news of an investigation by a law firm. Flotek’s stock price fell 15%. However, Flotek’s implied volatility subsided gradually. Currently, Flotek’s implied volatility is below its average of 61% in the past three years.

Seven-day stock price forecast 

Flotek stock will likely close between $6.42 and $5.50 in the next seven days. We’re considering Flotek Industries’ implied volatility and assuming a normal distribution of stock prices. We also assume one standard deviation probability of 68.2%. Flotek’s stock price was $5.96 on August 10, 2017.

Next, we’ll discuss whether investors have shown interest in Flotek stock.

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