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Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: Dennis Roth who wrote (156636)	10/12/2011 8:57:49 AM
From: Dennis Roth	1 Recommendation Read Replies (1) \| Respond to of 206150

C&J Energy Services Inc. (CJES) Lowering Price Target, Reiterate Buy 12 October 2011 ¦ 13 pages ir.citi.com Introducing a Buy Rating, with the Launch of CIRA's New Stock Rating System — Following a hiatus, in which we were unable to publish on this name, we are introducing our recommendation of Buy on CJES. See "Guide to Citi Investment Research Analysis (CIRA) Fundamental Research Investment Ratings" in the Important Disclosures section of Appendix A1 for a description of our rating system. CIRA’s investment ratings are Buy, Neutral, and Sell. Our ratings are a function of analyst expectations of expected total return (“ETR”) and risk. Risk ratings take into account price volatility and fundamental criteria. Stocks will either have no risk rating or a High risk rating assigned. Our Price Target Is Lowered from $33 to $25 — The 2011 P/E implied by our target has been reduced to 16.3x from 20.0x on the increased equity risk premium that has impacted the entire sector since we were last permitted to write about the stock Lock-up No Longer an Overhang — The 60-day lock-up affecting 26,235,700 shares (50.6% of total shares outstanding) expired 10 days ago. We believe that the selling pressure from the expiration of the lock-up is now behind us. The number of shares that are subject to a 180-day lock-up is 12,004,124 (23.1% of total shares outstanding). Acquisition Sentiment Bolstered — On October 10, Superior Energy Services (SPN) made a stock-and-cash offer to acquire Complete Production Services (CPX) at a 29% premium to the average CPX share price over the two months preceding the deal announcement. We believe that the strategic logic supporting oil services consolidation remains compelling for small-cap North American companies. CJES trades at an EV/EBITDA multiple of 3.3x based on estimated 2011 EBITDA. CPX is valued at an EV/EBITDA multiple of 4.3x based on consensus estimated 2011 EV/EBITDA. The multiple premium reflects the SPN offer for CPX disclosed on 10/10/11. Operating Activity Remains Robust — We believe that the recent stock selloff was tied to concerns about the sustainability of current high activity levels in the U.S. shale plays. We would use the selloff as a buying opportunity. (See our CJES Initiation Report from Sept. 7, 2011. )