Gabelli Upgrades Dril-Quip (DRQ) to Buy

Gabelli upgraded Dril-Quip (NYSE: DRQ) from Hold to Buy with a price target of $57.00.

The analyst comments "After a four-year pause, offshore activity is returning. E&P operators are increasing their offshore capital budgets. Project FID are forecast to reach 120, a level not seen since 2013. Finally, subsea tree awards are projected to increase to 300 trees in 2019 (slightly higher vs 2018, but up significantly from the low of 83 trees in 2016). DRQ will benefit from a pickup in offshore activity. Near term catalyst for DRQ include Sea Lion Phase 1 project reaching FID. The company entered into a FEED contract and frame agreement to supply up to 30 subsea production systems (~$200MM in value) for this project. In the meantime, Dril-Quip continues to focus on improving margins, generating free cash and maintaining a strong balance sheet. Despite declining revenue ~60% between 2014 and 2018, DRQ cumulatively generated $562MM in FCF over the same period."

For an analyst ratings summary and ratings history on Dril-Quip click here. For more ratings news on Dril-Quip click here.

Shares of Dril-Quip closed at $43.51 yesterday.

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