The Zacks Analyst Blog Highlights: National Oilwell Varco, Cameron International, Range Resources, EPL Oil & Gas and Concur Technologies
CHICAGO, March 14, 2013 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include National Oilwell Varco Inc. (NYSE: NOV), Cameron International Corp. (NYSE: CAM), Range Resources Corp. (NYSE: RRC), EPL Oil & Gas Inc. (NYSE: EPL) and Concur Technologies, Inc. (Nasdaq: CNQR).
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Here are highlights from Wednesday's Analyst Blog:
National Oilwell Varco Now a Strong Sell
On Mar 12, Zacks Investment Research downgraded oilfield services behemoth National Oilwell Varco Inc. (NYSE: NOV) to a Zacks Rank #5 (Strong Sell).
With markets remaining competitive and pricing likely to be soft, the company's margins are expected to suffer in the next few quarters. The recent weakness in the North American onshore drilling environment has also been a negative.
Why the Downgrade?
With new competitors entering the market and shrinkage of capital expenditure spending by the drilling contractors, NOV – which ranks ahead of Cameron International Corp. (NYSE: CAM) as the biggest U.S. maker of oilfield equipment – has seen its new equipment package pricing fall around 10% below the levels achieved during the peak of 2007–2008.
In particular, NOV's margins have been hit hard by the ongoing North American drilling slump. We expect the situation – characterized by tepid demand and weak pricing – to normalize only sometime in late 2013.
Additionally, the company's widespread international operations expose NOV to certain risks that include embargoes and/or expropriation of assets, exchange rate risks, terrorism and political/civil sentiment, etc.
As a result of these bearish factors, the tendency for a downward estimate revision has been more obvious in recent times. In fact, the Zacks Consensus Estimate for the first quarter has moved down by 14 cents (or 9%) to $1.39 per share over the last 60 days. The Zacks Consensus Estimate for the full year is $6.13, down 39 cents (or 6%) in the same timeframe
Stocks that Warrant a Look
While we expect NOV to perform below its peers and industry levels in the coming months and see little reason for investors to own the stock, one can look at Range Resources Corp. (NYSE: RRC) and EPL Oil & Gas Inc. (NYSE: EPL) as good buying opportunities. These domestic energy explorers – sporting a Zacks Rank #1 (Strong Buy) – have solid secular growth stories with potential to rise significantly from current levels.
Concur Tech Buys conTgo
Concur Technologies, Inc. (Nasdaq: CNQR) is a leading service provider in integrated travel and expense management. Recently, it acquired a privately owned company conTgo. This acquisition will enable CNQR to add location based comprehensive communication and messaging platform to its customers, suppliers and clients.
CNQR intends to deploy conTgo's leading cloud based technology and expertise to enhance its customers' experience by using itinerary data and location information with insight and context from past behavior. This will be applied in the context of tracking employees based on their location and communicating with them 24X7.
This will also help travelers make travel plans in accordance with their colleagues using locational data like hotel, city .etc. They can also manage to take up the transportation services along with their friends from the same hotel. Additionally, this will make delivery of offers based on itinerary data easier.
This step is expected to give CNQR an extra edge to rise above its competitors. This will help companies track and communicate with their travelers at any point of time, whatever be their location.
The terms of the contract were not disclosed. Due to the increased headcount and the resultant increase in operating cost arising out of this acquisition, the company's operating margin is expected to decrease marginally for 2013. However, the company will surely benefit in the long run from the improved customer experience that CNQR will be able to deliver through this acquisition.
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