Bank of America Upgrades RDC To Neutral, Increases PT To $44

Bank of America has upgraded its rating on shares of Rowan Companies Inc.

from Underperform to Neutral and has raised its price target from $34 to $44 in light of “expanding horizons.” In the report, Bank of America states, “Given upside to jackup dayrates, RDC's likely ultra-deepwater investments and the recent pullback, we are upgrading the shares of RDC to Neutral from Underperform. Critically, with the expected redeployment of cash into building at least two new drillships, we expect the market to focus increasingly on RDC's earnings power (potentially $6.00 in ‘15). We are increasing our ‘11/'12 EPS estimates to $2.23/$3.97 primarily owing to improved jackup market outlook partially offset by the announced sale of RDC's manufacturing division. We are increasing our PO to $44 from $34, which implies a ‘11x 2012 EPS estimate and is supported by our DCF.” RDC closed yesterday at $39.26.