Innovex (INVX): The Gift of Small Things; Initiate Coverage with a Neutral Rating and Dec 2027 PT of $33

We initiate coverage of Innovex International Inc. (INVX) with a Neutral rating and a Dec 2027 price target of $33, implying ~8% upside and a balanced risk-reward relative to our Smid-cap OFS coverage. INVX is strategically well positioned following the Dril-Quip combination, with long-term value creation anchored by margin expansion from its core product portfolio and footprint optimization, improving subsea market fundamentals, and a repeatable bolt-on M&A strategy. Its "big impact, small ticket" engineered consumables and select rental tools are critical to well performance yet represent only ~2-3% of total well costs, supporting pricing power and resilience through the cycle. A capital-light model (~2-3% of revenue in capex) with a 50-60% EBITDA-to-FCF conversion target underpins strong free cash flow. We model 190 bps and 157 bps of EBITDA margin expansion in 2027-28 to 20.5% and 22.1%, and FY27/FY28 adjusted EBITDA of $249mm/$281mm. Subsea wellheads and connectors are the key mul