RBC Raises SES Target to 7.25RBC Capital Markets just raised its SES target on very positive news out of the company. Here's the report summary text, verbatim:
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Event
Revising estimates and target after recent management update confirms growth outlook; Q3/07 preview
Investment Opinion
• Target and rating. We are raising our target price from $6.50 to $7.25 on revised estimates and reiterating our Outperform, Above Average Risk rating.
• Estimate revisions. We are revising our 2007 and 2008 f.d. EPS forecasts from $0.33 and $0.48 to $0.35 and $0.57, respectively. The modest revision to our 2007 estimate is due to our increased utilization rate and pricing forecast in Venezuela and the removal of our previously conservative assumption of a further delay in rig deployment in the U.S. The revision to our 2008 estimate is driven by increased pricing and utilization rate assumptions in Venezuela and
the assumption of additional growth of 4 net rigs in H2/08, offset by reduced utilization for Ecuador. We believe that there remains upside to our current growth assumptions.
• Robust international outlook. Recent updates from management through marketing and our meeting with management has confirmed that growth in international demand for Saxon's contract drilling services and rig equipment remains solid. This is driven by strong customer demand in Colombia, Peru and Mexico, improvements in Venezuela, and potential new opportunities in countries where Saxon does not operate. See page 2 for highlights by region.
• Q3/07 preview. Saxon plans to report Q3/07 results before market open on November 1, 2007. We maintain our Q3/07 f.d. EPS forecast of $0.08. Exhibit 1 on page 2 shows our summary forecasts.