Capital One Southcoast Reiterates a 'Neutral' on Natural Gas Services Group (NGS); Slightly Adjusts Estimates

November 9, 2009 10:42 AM EST

Capital One Southcoast reiterates a 'Neutral' on Natural Gas Services Group (NYSE: NGS), price target $18.

Capital One analyst says, "Estimates essentially unchanged w/ 4Q09 adjusted up modestly to $0.20 from $0.19 w/ modest sales revenue upside vs our prior exp and '10/'11 flat at $0.95/$1.39...Net positive qtr with the seq up Sales revenue particularly notable (not inclined to build in any material upward trajectory going fwd just yet, but signs of a firming bottom are encouraging), while the gross margin maintenance w/in Rental continues to surprise in a tough competitive pricing environment. While utilization is bleeding off at a little faster clip than our exp (we'd modeled a more modest drop this qtr to ~74% - 75% and are now extending current levels ~70% through 1H10), holding the line on gross margins and pricing per unit/per month (essentially flat in both 2Q and 3Q) speaks to good execution.

"W would continue to expect a fairly restrained rental build profile over the next several quarters as NGS will respond to any market turn by returning idled equip to the field first. Great execution as usual combating a mkt w/ a lot of competitive pricing (FCF positive once again in 3Q), but also still feel we're valuation constrained in the high teens."

To see more analyst ratings on NGS Click Here.

Natural Gas Services Group, Inc. (Natural Gas Services Group) is a provider of small-to-medium horsepower compression equipment to the natural gas industry.

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