Wells Fargo Initiates Coverage on Smith International (SII) with a Market Perform; Balanced Risk/Reward

October 29, 2009 7:22 AM EDT

Wells Fargo initiates coverage on Smith International, Inc. (NYSE: SII) with a Market Perform. Valuation range of $31-36.

Wells analyst says, "SII is concurrently trying to adjust to the leadership of CEO John Yearwood and CFO William Restrepo, who have served as employees at SII only since August 2008 and October 2009; manage its WHQ-increased exposure to oversupplied U.S. markets and intensifying competition in fluids, especially in deepwater; and upgrade and geographically expand WHQ's 6th-ranked directional drilling/LWD business. Strategically, SII plans to continue to focus on drilling optimization instead of emulating the Big 3, and to pursue meaningful, further diversification. While SII has scored some notable wins so far, this strategy, and its dependence on directional drilling advancement, could result in below-peer long-term growth. Still, SII's history and client stature suggest that the company is not to be underestimated. In effect, we see balanced risk-reward."

To see more analyst ratings on SII Click Here.

Smith International, Inc. provides products and services to the oil and gas exploration and production industry in the United States and internationally.

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