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ENSCO International (ESV) – Bull of the Day

Source: http://www.zacks.com/commentary/10977/ENSCO+International+%28ESV%29+-+Bull+of+the+Day
 Posted on Friday, May 22nd, 2009 | In Market Commentary, Stocks to Watch
Contributed by: Zacks Market Commentaries (http://www.zacks.com/) -

The recent strength in crude oil prices has
improved the outlook for a cyclical recovery.
Historically, jackup drillers like ENSCO (ESV) have enjoyed strong
early-cycle leverage, a trend that we believe will
play out this time as well.

While the near-term
situation is expected to remain weak, with rig
oversupply and soft demand weighing on dayrates,
the medium to long-term outlook remains
favorable. ENSCO enjoys strong leverage to this
outlook given its fleet of premium jackup rigs, an
exceptionally strong balance sheet, and growing
deepwater exposure.

Our
new $45 price objective, raised from $40 before, results from 2009 P/E and EV/EBITDA multiples of 7.4x
and 4.3x, respectively, both well within historical trading ranges.Zacks Investment Research

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