Zacks senior oil & gas industry analyst Sheraz Mian is reiterating his Hold recommendation on shares of oil field equipment supplier Smith International (SII) today. We checked out his latest report on the company to learn more about it:
'We are maintaining our Hold recommendation on Smith International shares, as we continue to believe that the stock's risk-reward trade off is already reflected in its premium valuation relative to the peer group. Smith's diversified business mix, characterized by exposure to the short duration and relatively volatile domestic onshore market, and the long-duration, but relatively stable, offshore markets provides it with attractive growth opportunities.
'While we continue to expect strong revenue and margin expansion, aided by demand acceleration, price increases and cost discipline, we believe that current valuation already discounts these positives. Based on most conventional valuation metrics, the stock is trading at a significant valuation premium relative to the peer group.
'We believe this leaves little room for upside from current levels. In fact, the stock may be vulnerable to a sentiment shift in the likely event of a temporary commodity-price weakness.'
Read the full analyst report on SII.
Get real-time market insights and profitable stock recommendations from the team of analysts at Zacks Equity Research. See all todays Analyst Blog entries on Zacks.com.