The following excerpts explain why Zacks energy sector analyst Sheraz A. Mian remains bullish on Patterson-UTI Energy, Inc. (PTEN), the oil and gas driller:
'We are maintaining our Buy recommendation on Patterson-UTI shares following the company's better-than-expected third-quarter results. Weak natural gas prices due to a storage overhang and more aggressive additions to supply have come together to soften the land drilling market. But we do not expect the softness to last long.
'We think that the land drilling market's supply-demand fundamentals may already be stabilizing, given the slowing trend in new rig additions and continued strength in the rig count. Patterson-UTI shares have been weak for some time now, reflecting concerns about the land drilling outlook. The secular demand outlook continues to remain favorable, while the market's softness appears to have slowed down the speed of new rig additions.
'This is the primary reason for our continued positive view of Patterson-UTI shares. Our unchanged 12-month price objective of $26 reflects 2008 P/E and EV/EBITDA multiples of 8.7x and 4.3x, respectively both well within historical trading ranges.'
Read the full analyst report on PTEN.
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