UPDATE: Dahlman Rose Initiates Lufkin Industries with Buy, $96 PT

Dahlman Rose has initiated coverage on Lufkin Industries

with a Buy rating and a $96 price target on booming oil activity and further increases in oil prices. Dahlman Rose says, "We believe there could be upside to EPS from further price increases in artificial lift. The company's guidance incorporates the current price increases that are rolling through backlog. We believe further price increases later in the year could lead to margin expansion and higher guidance ranges going forward. Despite operational shortfalls in 2011, if efficiencies are successful in 2012, there could be additional margin expansion." LUFK closed at $77.59 a share yesterday.