Credit Suisse Group Analyst James Wicklund expects better days ahead for Cameron International Group (CAM), and he’s selected the stock as his number-two pick for 2014. He believes management has learned a lesson from the last few quarters where they’ve “overpromised and under-delivered.”
“I think they are going to improve going forward. They have had some issues with deliveries, and the fact that their shipments are at record highs and they’re not as efficient as they need to be — they’ve got a plant in Berwick that was supposed to be more completed than it is — all of those are being fixed,” Wicklund says. “There is nothing like the glare of a quarterly miss and a much more involved board to focus management’s attention on what needs to be done.”
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While Wicklund says Cameron could be a target for activist investors, he believes any impact would not be significant. In addition, he says management has shown a willingness to repurchase stock and incur debt as necessary.
“I think all of these things are going to come together to improve the current perception of Cameron,” Wicklund says. “And clearly with its diversified manufacturing bases, it’s in a good position in several of its businesses, and it’s got valuation recovery from regaining of credibility and resetting of expectations better than most any company in my universe.”
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