UPDATE: Bank of America Downgrades Dril-Quip to Underperform on Limited Upside
Bank of America lowered its rating on Dril-Quip (NYSE: DRQ) from Buy to Underperform but raised its price target from $72 to $79.
Bank of America said, "DRQ's shares have outperformed the Oil Service Index (OSX) by 9pp this year owing to the recovery in Gulf of Mexico deepwater drilling and expectations for a large Petrobras order. However, we believe these catalysts are reflected in the current share price and see limited upside to estimates. Our new PO of $79, or 20x forward EPS, implies just 10% upside vs 20%+ on average for our coverage. We continue to forecast significant growth for DRQ, but see more upside potential in FMC Technologies (FTI) and Cameron (CAM). An acquisition is a key risk to our call, but currently seems low probability given capacity additions and valuation."
Dril-Quip closed at $71.54 on Tuesday.
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