Zacks Bull and Bear of the Day Highlights: Cabot Oil & Gas, JDS Uniphase, Nabors Industries, Patterson-UTI Energy and Pride International
CHICAGO, June 22, 2011 /PRNewswire/ -- Zacks Equity Research highlights: Cabot Oil & Gas Corp. (NYSE: COG) as the Bull of the Day and JDS Uniphase (Nasdaq: JDSU), as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Nabors Industries Ltd. (NYSE: NBR), Patterson-UTI Energy (Nasdaq: PTEN) and Pride International (NYSE: PDE).
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Full analysis of all these stocks is available at http://at.zacks.com/?id=2678.
Here is a synopsis of all five stocks:
We are upgrading Cabot Oil & Gas Corp. (NYSE: COG) shares to Outperform from Neutral, reflecting the company's impressive exposure to the high-return Marcellus and Haynesville Shale plays, as well as its above-average production growth. Furthermore, the capital infusion of over $200 million bodes well for Cabot, which will help the company bolster its natural gas operations.
Buoyed by the growth momentum from the company's drilling efforts, particularly in its North region, Cabot recently reported better-than-expected first-quarter results. A relatively low-risk profile and longer reserve lives are other positives in the Cabot story.
Considering these factors, we believe Cabot is well positioned going forward and consider it an attractive investment. Our $71 price objective is based on a multiple of 16.8X trailing twelve-month cash flow.
We have downgraded our recommendation on JDS Uniphase (Nasdaq: JDSU) to Underperform. Recent trends in the optical component industry indicate a glut of inventory on the part of the telecom carriers. The North American and European markets have yet to completely recover from the recession.
In the meantime, several industry players indicated that China may not be able to compensate the loss of the developed markets fully. Moreover, the devastating earthquake and tsunami in Japan will reduce demand and may disrupt the supply chain. We believe the weak industry demand may continue for a couple of quarters.
Excluding these broad-based macro scenarios, JDS Uniphase is facing growing competition in those sub-segments of the optical network industry, which had been exclusive to the company. Meanwhile, the stock price of JDS Uniphase surged more than 86% last year.
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Nabors Guides for Q2
Weighed down by lower-than-expected performances in the Pressure Pumping and International business units, Nabors Industries Ltd. (NYSE: NBR) projects operating income in the range of $165 million to $170 million for the second quarter of 2011. The negative effects will be partially offset by strong contributions from the U.S. Lower 48 and Canadian operations.
For full-year 2011, global land drilling contractor, Nabors, expects operating income to reach about $900 million.
Management commented that Superior Well Services, bought in August, 2010, to boost pressure pumping operations, failed to function as per expectation in the second quarter, thereby hurting results. This was primarily due to unfavorable weather conditions in the Bakken and Marcellus areas coupled with glitches in start-up of the new equipments. Superior is expected to operate smoothly by the end of 2011.
Internationally, delays in contract awards along with geo-political disruptions slowed down the company's activities in Saudi Arabia and Iraq and, to some extent in Yemen, Colombia and Mexico. We expect this tardiness to persist throughout 2011 and improve in 2012.
On a positive note, Nabors' U.S. Lower 48 segment won six more new build contracts since the last quarter and is in the process of working with nine legacy rigs.
Barbados-based Nabors conducts oil, gas and geothermal land drilling operations and is one of the largest land well servicing companies and workover contractors in the U.S. The company competes with peers such as Patterson-UTI Energy (Nasdaq: PTEN) and Pride International (NYSE: PDE).
We are maintaining our long-term Neutral rating on the stock.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
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