B.Riley FBR Initiates a Hold Rating on Dril-Quip (DRQ)

By Ryan Adsit

B.Riley FBR analyst Tom Curran initiated coverage with a Hold rating on Dril-Quip (DRQResearch Report) yesterday and set a price target of $44. The company’s shares opened today at $42.85.

Curran observed:

“DRQ reported recurring EPS of ($0.04), adjusted EBITDA of $7.0M, and revenue of $97.3M, versus consensus of ($0.20), $0.5M, and $87.2M. ($2.09) included large non- cash charges comprised of inventory impairments ($85.5M) and restructuring charges ($8.7M). CFO Jeff Bird noted that management had marked down inventory to reasonable resale value based on their outlook of the market. Revenue exceeded the high end of management’s guidance of $80-90M, largely due to increased product sales in Asia-Pacific. Management cited Q4 revenue as a fair expected quarterly run rate heading into 2019, as the company guided full- year revenue to $360-400M.”

According to TipRanks.com, Curran has currently no stars on a ranking scale of 0-5 stars, with an average return of -9.6% and a 37.8% success rate. Curran covers the Basic Materials sector, focusing on stocks such as Select Energy Services Inc, Tetra Technologies, and Forum Energy Tech.

The word on The Street in general, suggests a Hold analyst consensus rating for Dril-Quip with a $41.50 average price target, implying a -3.2% downside from current levels. In a report issued on February 20, Barclays also downgraded the stock to Hold with a $39 price target.

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Based on Dril-Quip’s latest earnings release for the quarter ending December 31, the company reported a quarterly GAAP net loss of $74.91 million. In comparison, last year the company had a GAAP net loss of $71.49 million.

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Dril-Quip, Inc. engages in the design, manufacture, sale and services engineered offshore drilling and production equipment that is well suited for use in deepwater, harsh environment and severe service applications.