Opportunity at Patterson-UTI - Analyst Blog
26 Februar 2013 - 6:40PM
Zacks
Shares of Patterson-UTI Energy Inc. (PTEN) hit
a 52-week high of $24.64 on Feb 19. In fact, the Houston-based
onshore contract dealer has seen its stock price climb more than
20% since the beginning of the year.
Despite this price appreciation, we remain optimistic on the firm’s
near-term prospects, supported by consistency in its earnings/cash
flows, attractive fundamentals and a positive outlook. These
factors are reflected in Patterson-UTI’s Zacks Rank #2 (Buy),
implying that it is expected to outperform the broader U.S. equity
market over the next one to three months.
Why the Bullishness?
Our bullish investment theme stems from strong demand for
Patterson-UTI’s services in the unconventional oil and liquids-rich
plays. In particular, the company’s technologically-advanced ‘Apex’
rigs are the key to its success.
Patterson-UTI’s proprietary design makes the rigs move faster
than conventional rigs, drill quicker and more efficiently than
conventional rigs, and allows for a safer operating environment. As
such, these rigs are better suited for the new demands of the
exploration business and, therefore, command higher dayrates and
utilization than rigs from other land drillers.
The second-largest North American land drilling contractor after
Nabors Industries Ltd. (NBR) is also benefiting
from the 2010 acquisition of certain assets of Key Energy Services,
an onshore well service rig provider. Through this transaction,
Patterson-UTI has not only expanded its shale drilling ability, it
also stands to benefit by coming out of their historical stronghold
in the Appalachian Basin into the pressure pumping markets of the
Barnett, Eagle Ford and Permian Basin.
We also like Patterson-UTI Energy’s recent decision to retire 36
rigs from its fleet. We expect the retirement to act as a positive
step towards balancing the market, given the extreme overcapacity
caused by depressed natural gas prices.
Based on solid expected performance from the company, thirteen out
of 20 estimates for 2013 have moved higher in the past 30 days,
pushing the Zacks Consensus Estimate up by 26 cents (or 23.4%) to
$1.37. For 2014, seven out of 17 estimates moved north in the past
30 days, helping the Zacks Consensus Estimate advance by 11 cents
(or 6.8%) to $1.72.
Other Stocks to Consider
In addition to Patterson-UTI, there are certain other energy
equipment suppliers like Helmerich & Payne
Inc. (HP) and McDermott International
Inc. (MDR) that offer value and are worth buying now. Both
these company’s sport a Zacks Rank #2 (Buy).
HELMERICH&PAYNE (HP): Free Stock Analysis Report
MCDERMOTT INTL (MDR): Free Stock Analysis Report
NABORS IND (NBR): Free Stock Analysis Report
PATTERSON-UTI (PTEN): Free Stock Analysis Report
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