Precision Drilling shares rose 4.5% on October 20, 2026, following TD Cowen’s upgrade from Hold to Buy and an increase in its price target to C$150 from C$111. The upgrade focused on the Canadian drilling contractor’s prospects for improving U.S. margins, despite expectations for weak third-quarter results.
Key Takeaways
- TD Cowen upgraded Precision Drilling to Buy and raised its price target to C$150.
- Management expects fourth-quarter U.S. margins to approach US$10,000 per utilization day.
- The margin target is forward-looking, not a reported result or a US$10,000 daily increase.
Table of Contents
- Precision Drilling shares advance on recovery expectations
- What the U.S. margin target actually means
- Conclusion
Precision Drilling shares advance on recovery expectations
TD Cowen’s more favorable rating put the emphasis on potential operating improvement in the fourth quarter of 2026 and beyond, rather than on anticipated third-quarter performance. The firm highlighted management’s commitment to improving U.S. margins, with further gains anticipated into 2027.
The price-target change is an analyst assessment, not company guidance or a guaranteed future share price. Its Canadian-dollar denomination also matters when comparing it with Precision Drilling’s New York-listed shares, which trade under the symbol PDS.
Precision Drilling supplies contract drilling and related services to oil and natural gas producers, operating primarily in Canada, the United States and selected international markets.
| Item | Details |
|---|---|
| Second-quarter 2026 revenue | C$453 million, up 11% year over year. |
| Second-quarter adjusted EBITDA | C$97 million, down 10% year over year; a non-IFRS measure. |
| Second-quarter operating cash flow | C$146 million. |
| Second-quarter debt reduction | C$50 million. |
What the U.S. margin target actually means
In Precision Drilling’s second-quarter 2026 results announcement, released July 28, President and Chief Executive Officer Carey Ford said fourth-quarter U.S. margins were expected to approach US$10,000 per utilization day. That is a projected margin level, not an increase of US$10,000 per day.
The company reported a second-quarter U.S. operating margin of US$6,212 per utilization day, down from US$9,026 a year earlier. Precision defines this measure as revenue per utilization day less operating costs per utilization day.
Higher rig-reactivation costs weighed on the second-quarter figure. Precision reactivated seven U.S. rigs during the quarter, compared with four a year earlier, and said those costs averaged US$2,387 per utilization day versus US$648.
That operating backdrop explains the importance of the fourth-quarter objective: higher activity had already supported revenue, but had not yet translated into stronger margins. Achieving the projected level would therefore represent a recovery from the second-quarter result.
Conclusion
The next operating test is whether Precision Drilling’s fourth-quarter U.S. margins approach management’s stated target. The October 20 upgrade reflects confidence in that recovery, while the target itself remains an expectation rather than a completed result.
Read More News
Disclaimer
This FinanceVelix article provides general information, not personalized financial, investment, legal, or tax advice. Market prices, interest rates and economic conditions can change; investments carry a risk of loss. Facts reflect the material available when published and may change. Check important information independently and consult a qualified professional when needed. Mentioning an asset, company, or service is not an endorsement.
