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Gold/Mining/Energy : Strictly: Drilling and oil-field services
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To: SliderOnTheBlack who wrote (52985)10/14/1999 1:06:00 PM
From: oilbabe  Read Replies (1) of 95453
 
Just for you Slider:

RESEARCH ALERT -Rowan Cos raised to long-term buy
NEW YORK, Oct 14 (Reuters) - Merrill Lynch said on Thursday it raised its rating of oil services company Rowan Cos. Inc. (NYSE:RDC - news) to long-term buy from accumulate.

-- Earnings for 1999 diluted are $0.18; Market Cap. are $1,276 million.

Also Jeffries reiterated BUY and keeps target of $24.00

-- Merrill is upgrading Rowan based on strong EPS growth prospects, E&P spending outlook (more than 15 percent in 2000), and higher Gulf of Mexico drilling activity and pricing.

-- Merrill's 12-18 month price objective is $30, or 20 times its 2001 estimates CFPS of $1.50, the same multiple at which the stock traded during the previous upswing in 1996.

-- Rowan has a strong EPS growth, Merrill said. Its 2001 earnings is $0.75 up from $0.10 in 2000 and diluted $0.18 in 1999. Near term upside depends on the Gorilla V and the rate of change in Gulf of Mexico pricing (17 of its 23 jackups are in the GOM).

-- Merrill estimates peak EPS of $2.86 vs. $1.76 in 1997. Based on historic trading multiples, stock could exceed $45 in next cycle.

-- Rowan offered 10 million shares to pay down debt (26 percent debt/cap post deal). Given the deal, Merrill said Rowan's stock price will be capped and so is maintaining near term Accumulate. Merrill would be buyer on the deal at a price of $15 or better, and it expects the deal to close in the fourth quarter 1999.

-- Rowan shares were up 7/8 at 15-9/16 on the New York Stock Exchange.
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