HTG30 Oct 2010 08:55
Broker finnCap has upgraded its earnings forecasts for Hunting after the oil services group announced a ‘very positive trading update’ on Friday.
Analyst David Buxton said the update signalled that “trading is well positioned to exceed forecasts for the current year”.
The acquisition of Innova-Extel, the Texas-based supplier of ‘harsh environment’ electronics technology, has performed better than expected with strong demand in the directional drilling area.
Additionally, “the Well Construction division continues to rebound, boosted by strong shale gas drilling activity”, Buxton said. Well Completion has also seen improved conditions and should experience a strong fourth quarter.
“Well Intervention boosted by acquisitions...continues to outperform expectations and has a strong order backlog,” the broker said.
After the group increased its earnings guidance, the broker upgraded its forecasts for 2010 from a pre-tax profit of £38.8m to £45.2m, which gives an earnings per share of 21.4p – a 17% increase from the broker’s previous forecast of 18.2p.
Buxton said that the trading update “paints an upbeat picture of demand recovery in most of its markets”, and has increased the target to 700p while maintaining the ‘buy’ rating.