Cowen Reiterates Market Perform on Dril-Quip (DRQ) Following TIW Corp Acquisition
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Cowen reiterated a Market Perform rating and $60.00 price target on Dril-Quip (NYSE: DRQ) following the company's acquisition of TIW Corporation. The deal implies ~$0.15/share, or 13% accretion, for 2018. TIW generated peak revenues of ~$140MM in 2014 and is expected to generate $60-70MM revenues in 2016. DRQ expects TIW to generate $80-100MM and EBITDA margins similar to DRQ in 2018.
Analyst Marc Bianchi commented, "We view DRQ's acquisition of TIW Corporation a modest positive. The deal is ~13% accretive to 2018 EPS, provides an entry into the onshore market, and utilizes "excess cash". However, this acquisition may reduce the likelihood of a DRQ takeout. Proforma, the company will still generate ~85% of their revenues offshore, which we believe will require $55-60/bbl oil to drive incremental activity."
Shares of Dril-Quip closed at $54.45 yesterday.
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