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Benzinga's Initiation Summary for June 6, 2012

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Listed below are today's Top Initiations covered by Benzinga:

Morgan Stanley Initiates Edgen Group (NYSE: EDG) at Overweight:

Morgan Stanley comments, "EDG is exposed to the most promising trends. We favor EDG's more specialized approach, focusing on just 14k SKUs vs. 150k offered by MRC. About 25% of EDG's sales comes from int'l upstream offshore projects, driven by demand for drilling and new jackup rigs amidst a seasoned fleet with an average age of 30 years. Another ~60% of EDG's sales comes from US upstream and midstream end-markets, of which 85% is related to shales. This compares to MRC which derives just 50% of its US upstream and midstream from shales, with minimal offshore exposure."

Morgan Stanley Initiates MRC Global (NYSE: MRC) at Underweight:

Morgan Stanley says, "MRC … derives just 50% of its US upstream and midstream from shales, with minimal offshore exposure. …While there are no direct comps to … MRC, we used industrial distributors with similar margin profiles and cyclicality, which have historically traded at an average multiple of 7.5x 12-mo forward EBITDA. We value MRC at $27 (30% upside) by applying a multiple of 7x, a modest discount due to MRC's higher debt profile."

Jefferies & Company Initiates Edgen Group (NYSE: EDG) at Buy:

Jefferies comments, "We expect the capital spending in Oil & Gas to last a couple more years and benefit for EDG's businesses. Combined with expected margin expansion, we see strong EBITDA and EPS growth in 2012-13. We consider EDG's valuation compelling. Jefferies acted as a joint bookrunner for EDG's initial public stock offering completed on 4/30/12."

Citigroup Initiates Edgen Group (NYSE: EDG) at Buy:

Citigroup says, "As a distributor of specialty steel products to companies across the global energy supply chain, EDG should benefit from higher levels of capital spending on energy-related infrastructure. We believe these strong fundamentals provide a compelling investment opportunity in light of the stock's significantly discounted valuation versus its peers."

Drexel Hamilton Initiates The Allstate Corporation (NYSE: ALL) at Hold:

Drexel Hamilton notes, "Allstate sells at 85% of book value and at less than 10x next year's projected earnings, with a dividend yield of 2.7%. We project $4.12 in operating EPS for 2012, assuming moderate CAT loss experience as compared to large CAT losses in 2011; we further estimate operating EPS of $4.27 for 2013. Our target price is $37, based on assumed 85% multiple of projected 2013 book value of $43.62. We are initiating with a Hold rating, with the stock trading close to its recent high."

All of Benzinga's Initiation coverage can be viewed here.

Posted-In: Citigroup Drexel Hamilton Jefferies & Company Morgan StanleyAnalyst Color Initiation Analyst Ratings Best of Benzinga

 

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