Capital One Southcoast Downgrades National Oilwell Varco (NOV) to Neutral; Valuation Call

October 20, 2009 8:36 AM EDT

Capital One Southcoast downgrades National Oilwell Varco (NYSE: NOV) from Add to Neutral. Target Price: $50.

Capital One analyst says, "Principal rationale is a full valuation w/ the stock already baking in optimism for PBR order pull-through in 4Q09-1H10, along w/ our expectation for a flat outlook elsewhere w/in PS&S and Distro and a still slow recovery likely on the table through mid-year '10...Still expecting Rig Tech op margins to hang in there OK but begin a more material decline through 1H10 rolling onto lower-priced backlog (modeling 26.8% vs 27.2% clean margins in 2Q ex gains from the floater cancellation w/ a trough ~23%-24%). Our 2010 order expectations already factor in ~2 floaters/qtr adding to the notion that PBR is already baked in here and there's greater propensity to see ests head directionally down vs up if things push out."

To see more analyst ratings on NOV Click Here.

National Oilwell Varco, Inc. designs, constructs, manufactures, and sells systems, components, and products used in oil and gas drilling and production; provides oilfield services and supplies; and distributes products, and provides supply chain integration services to the upstream oil and gas industry worldwide.

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