Janney Montgomery Scott Upgrades Layne Christensen (LAYN) to Neutral

March 31, 2009 9:47 AM EDT

Janney Montgomery Scott upgrades Layne Christensen (Nasdaq: LAYN) from Sell to Neutral.

Janney analyst says, "Layne posted flat year-over-year earnings this week, with a worse than expected fourth quarter offsetting three quarters of growth and ending a three year expansion. A precipitous decline in mineral exploration is the key culprit, as the water business is holding up relatively well despite tougher competition in a weak economy and the small energy business is benefiting from forward-sold natural gas. We reduce our belowconsensus estimate for FY2010 from $1.19 to $1.05, but maintain our fair value estimate of $18, given the company’s cash flow generation and balance sheet strength. With the stock already down 25% from last week’s high, we believe the shares more clearly reflect the downside risk and upgrade our rating to NEUTRAL from Sell. We believe Layne is well-positioned to weather this downturn and emerge stronger in the next up cycle and its underlying strength will support the stock even during a difficult year."

Layne Christensen Company provides drilling and construction services and related products in two principal markets: water infrastructure and mineral exploration, as well as being a producer of unconventional natural gas for the energy market.

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