Jesup & Lamont Upgrades Hercules Offshore (HERO) to Buy

July 30, 2008 9:37 AM EDT

Jesup & Lamont upgrades Hercules Offshore (NASDAQ: HERO) from Neutral to Buy with a $37.50 price target.

The firm highlights that the company reported Q2 EPS of $0.22, excluding a separation charge of $0.04 per share. This was below the consensus estimate of $0.25 and Jesup & Lamont’s estimate of $0.24. Therefore the firm lowers their 2008 EPS estimate from $1.55 to $1.40, and reduces their 2009 EPS estimate from $3.40 to $3.00.

The firm believes that they have already seen the bottom in Hercules' two major business segments. Also, the upgrade is mainly due to the pullback in the shares. The firm said, "Hercules has grown a tremendous amount in the last four years and is a major player in both the domestic jackup market and the liftboat market. The company has tremendous leverage to improving markets and excess capacity which may be added as demand increases. Our new rating is a BUY and we would recommend investors use the current pullback in the stock to build positions."

Hercules Offshore, Inc. provides shallow-water drilling and marine services to the oil and natural gas exploration and production industry in the U.S. Gulf of Mexico and internationally.

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