Cameron International Corporation (CAM) remains underappreciated in the offshore drilling equipment and services space as the company trades at a discount to companies like FMC Technologies (FTI) and is expected to reverse some of its share loss in the subsea production equipment from a geographic and consumer standpoint, says Scott Gruber, Senior Research Analyst at Sanford C. Bernstein & Co., LLC.
“Within the equipment space, I think the Cameron story is interesting because you gain exposure to growth and production equipment at a much cheaper price than FMC. Within offshore drillers, rig rates started moving early in the cycle. I think they’ve reached their peak within the deepwater in the low $600,000 a day range, and I just don’t see much upside from there because they’re generating very good returns on incremental investment,” Gruber said.
Gruber says even the most bullish sellside analysts underappreciate Cameron‘s benefits from the major themes within oil and gas. He says the oil and gas equipment and services company would recapture offshore drilling customers this year, and the geographic and customer standpoint look positive for the company.
“I believe [Cameron‘s] growth prospects are underappreciated even by a group of sellside analysts who tend to err on the side of being overly bullish. I believe that their revenue growth can exceed consensus expectations through 2015, and I think the market will gain insight into that trend via very healthy order intake for their capital equipments in the quarters ahead,” Gruber said.
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