These are some of the top pre-market analyst downgrades and cautious research calls we have seen early this Tuesday morning with about two hours until the open:
Dun & Bradstreet (DNB) Started as Neutral at Baird.
Goldcorp (GG) Cut to Neutral at UBS.
Hartford Financial (HIG) Cut to Hold at Citigroup.
Masco (MAS) Cut to Sell at UBS.
Mindray Medical (MR) Cut to Neutral at Goldman Sachs.
Risk Metrics (RMG) Started as Neutral at Baird.
JON C. OGG
Oilfield services company Basic Energy Services (NYSE:BAS) released its June operations report this morning. The company has increased its rig count by one over May, and thirty since a year ago. Rig utilization stands at 79%, and drilling utilization is down a few points from May, but up from 63% to 83% over June 2007. These are solid numbers, and the company’s president and CEO expects improvements in pricing to offset higher fuel and labor costs.
The interesting news is behind the numbers (as usual). In April, Basic announced a "merger of equals" with Grey Wolf (NYSE:GW), a well driller. The surviving entity will retain the Grey Wolf name and NYSE ticker. Grey Wolf shareholders will receive $1.82 in cash plus one share of stock in the new company in exchange for four shares of existing Grey Wolf stock. Basic stockholders receive $6.70 in cash and 0.91975 shares of stock in the new company for each share of Basic stock. Then, in early June, Canada’s Precision Drilling Trust (NYSE:PDS) made an unsolicited offer of $9.00/share in cash and stock for Grey Wolf. Precision has bumped its offer twice, and it now stands at $10.00/share. Precision, like Grey Wolf, is a drilling company, and the conventional wisdom seems to be that the deal between Precision and Grey Wolf makes more sense than the Grey Wolf/Basic deal because there is little chance for cost-cutting in the Basic merger.
On Monday, RiskMetrics (NYSE:RMG) weighed in with a report questioning the Basic/Grey Wolf merger, and raising questions of conflict of interest on Grey Wolf’s Board. Yesterday, Egan-Jones Proxy Services recommended that Grey Wolf stockholders approve the Basic merger at the special meeting called for July 15th. Grey Wolf issued a press release citing Egan-Jones’ recommendation.
The combination of Precision Drilling and Grey Wolf yields a larger drilling company, but it’s hard to see how there will be significant cost savings. The Basic/Grey Wolf merger gives Grey Wolf some additional drilling capability, plus services such as completion, workovers, and abandonment. Strategically, the latter deal seems to position the merged company better, but it won’t pay off in a quarter or two. To some shareholders, that quick payoff trumps everything else.
Paul Ausick
July 9, 2008
Below are the top analyst upgrades and downgrades we are looking at this Tuesday morning:
Citigroup raised overseas ship tankers to Buy from Hold: General Maritime (NYSE: GMR), Overseas Shipholding (NYSE: OSG), and Teekay Shipping (NYSE: TK).
Jon C. Ogg
March 18, 2008
These are not all of the analyst calls moving stocks this morning, but these are the top ten individual analyst calls that 247WallSt.com is focusing on this morning:
Jon C. Ogg
March 5, 2008
RiskMetrics Group, Inc. (NYSE: RMG) priced its long-awaited IPO of 14 million shares at $17.50 per share. This was actually at the low-end of the $17 to $19 range, and you can probably blame the recent three weeks of the stock market for that.
This one was in the pending category for long enough that you might have put it in the category of "will it come public?" if you considered the current state of the stock market. But what is interesting here is that the timing of this IPO actually could not have been better. Here is why:
After about 30 minutes this has already traded over 4.5 million shares and was trading at $21.22. So far its daily trading range is $20.23 to $23.10. The underwriters were also listed as Credit Suisse, Goldman Sachs and Banc of America.
When you have potential blow-ups all over Wall Street from major and minor financial firms, this company is in the sweet spot and probably will continue to be there for quite some time. Buzzwords like counterparty risk, CDO exposure, mortgage defaults, credit default, risk exposure, and the like are all actually music to RiskMetrics’ ears. One man’s pain is another man’s pleasure.
Jon C. Ogg
January 25, 2008
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