Susquehanna Initiates Coverage on Cameron International (CAM) with a Positive

November 11, 2009 8:52 AM EST

Susquehanna initiates coverage on Cameron International (NYSE: CAM) with a Positive. Price target $48.

Susquehanna analyst says, "We expect tender activity for deepwater rigs, subsea equipment, surface, valves and compression to accelerate in 2010 as oil companies gain confidence in the commodity recovery, which should allow Cameron to build on its significant backlog and create earnings upside to consensus forecasts in 2011-2012. We like the company's unique business mix, which provides equipment for all phases of the oilfield services cycle - from its shorter cycle surface equipment to its later cycle drilling systems packages - allowing it some exposure to drilling activity recovery, but also backlog stability. This, coupled with its leverage to key secular growth themes such as international, deepwater activity, and low capex requirements, will provide strong free cash flows for the foreseeable future."

"Cameron's earnings have shown greater resilience during the 2008-2009 downturn than the service companies, though this likely will reverse in 2010 during the early phases of the recovery, which may cause earlier-cycle stocks to get a closer look. However, we believe the valuation at a sharp discount to the services companies (18.5x 2010 EPS vs. 22.6x) already reflects this slower potential growth, and we would look to add positions in this high-quality company at discounted levels."

To see more analyst ratings on CAM Click Here.

Cameron International Corporation provides flow equipment products, systems, and services to oil and gas, and process industries worldwide.

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• Susquehanna International Group of Companies

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