Forum Energy Technologies 'Recovery Expectations Growing Too Aggressive,' According To This Analyst

In a report published Monday, Baird analysts downgraded the rating on

to Neutral, while raising the price target from $22 to $24. The downgrade reflects the recent appreciation in the company's share price. The company's current stock valuation fully reflects the management's transformed execution abilities. But the market expectations of an aggressive recovery timeline for the North America land market appear to be unrealistic. "We believe sentiment has embedded rather aggressive recovery timelines for a rebound in North America land market activity, well beyond those implied by our analysis. Concurrently, we believe expectations may overestimate activity prospects across the Subsea business and the degree to which upcoming ROV aftermarket tailwinds drive results," the analysts stated. The company is poised to benefit significantly from the surge in completions activity in the second half of 2015. "However, the timing of 2H15 and the ultimate degree of this rebound makes us bearish," the analysts added. The market expectations for the offshore segment too are excessively elevated. The company's operational performance is now expected to be driven by incremental enhancements rather than sequential step changes. The analysts believe that the company's long term thesis remains intact, while Forum Energy Technologies "is levered to the secular growth trends of global unconventional development and deepwater." "Execution has continued to improve but as the recent run moved the stock past our previous price target, we believe moving to the sidelines is appropriate," the report added. The EPS estimate for 2015 has been reduced from $1.10 to $0.90.