OIS, OIL States International Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : OIS, OIL States International

OIS 8.040

+1.4%

Jan 9 9:30 AM EST

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

From: Dennis Roth	8/2/2007 8:29:06 AM
	of 13

Strength in offshore offset by weakness in Canada - Goldman Sachs - August 02, 2007 What's changed Adjusted EPS of $0.86 came in slightly below our estimate and consensus of $0.87. Variance to our estimate was driven by: Accommodations (-$0.04), Rental tools (-$0.03), Drilling services (-$0.02), Offshore products (+$0.06), Tubular services (+$0.01), and other items (+0.01). We raised our 2007/2008/2009 EPS by $0.08/$0.25/$0.40 to $4.00/$4.50/$4.88. We fine tuned our 12-month price target upward by $1 to $44 (based on 8.5x 2008E EV/DACF), due to higher estimates. Implications (1) Offshore Products delivered an excellent quarter with EBITDA margins expanding 275 bp q-o-q to 19.9% due to a favorable shift in mix. We expect margins to vary from 16%-20% going forward. The secular trend towards offshore remains one of our favorite themes for the group and we continue to expect strength in this division. However, we are slightly concerned by the lack of spare capacity, which may limit upside. (2) Weakness in Canada led to weaker-than-expected results in Accommodations, but we expect results to bounce back as the rig count recovers. We continue to like the oil sands accommodations business and believe it can drive margins going forward. (3) After a pause in acquisition activity, OIS announced two deals for rental tool companies in 2Q07. We believe that the acquisitions are value-accretive and account for a large portion of increase in our EPS estimates for OIS. Management indicated appetite for further deals that would be complementary to their completion product offerings. Valuation Oil States is trading at a 2008E EV-DACF/P-E of 8.1x/9.4x, versus the group average of 11.1x/14.4x. Key risks Key risks include (1) a US/Global recession could result in weaker commodity prices and E&P capex cuts and (2) weakness in natural gas prices in the United States could lead to E&P capex cuts in North America.

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next