Weatherford (IL/A): Reinstating IL/A rating - $42 fair value estimate - Goldman Sachs - December 07, 2005
After a period of NR, we are reinstating our view on Weatherford with an IL/A rating given the recent closing of its acquisition of certain assets from Precision Drilling. Our fair value of $42 suggests 17% upside potential, which is essentially in line with the 19% implied upside of our OSX 219 fair value. Our 2006 WFT EPS estimate of $2.03 is in line with consensus.
We believe the PDS acquisition enhances WFT's long-term growth/ return potential by
(1) boosting technology content,
(2) opening new growth + cross-selling opportunities +
(3) diluting mature US exposure (e.g. rentals). Moreover, integration appears to be proceeding well. Visibility on revenue synergies beyond our current estimates may be a catalyst to become more aggressive, with detail on 2006 capex in January potentially the next data point.
Each of the analysts named below hereby certifies that, with respect to each subject company and its securities for which the analyst is responsible in this report, (1) all of the views expressed in this report accurately reflect his or her personal views about the subject companies and securities, and (2) no part of his or her compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this report: Terry Darling, Jerry Revich. |
