Big Targets on GEO
Globe says Geodrill rated "buy" in new coverage
2012-03-01 06:27 ET - In the News
The Globe and Mail reports in its Thursday, March 1, edition that West African-based mineral driller Geodrill ($3.15) is a "pure play on one of the hottest mining regions globally," according to Cormarck Securities analyst Maggie Johnson. The Globe's Jody White writes in the Eye On Equities column that Ms. Johnson is commencing coverage on Geodrill, which operates a fleet of 27 drilling rigs. She likes the company's aggressive growth plans and potential to almost double its rig fleet and pretax earnings over the next two years. Not only does the company carry far less exploration and financing risk than many of its competitors operating in the region, says Ms. Johnson, it has the youngest rig fleet in the industry. Combined with its concentration in multipurpose rigs and its geographically condensed operation, this enables very high utilization and profitability, she explains. "Longer term, we believe that Geodrill is a prime takeout target, particularly if current low valuations persist," says Ms. Johnson. "Under this scenario, we believe Geodrill could garner $5.50 per share." Ms. Johnson rates Geodrill "buy," with a $5 target price. The stock has a 52-week range of $1.76 to $3.75.