Sterne Agee Upgrades National Oilwell Varco To Buy

Sterne Agee has published a research report on National Oilwell Varco, Inc. NOV and has upgraded the company to Buy from Neutral. In the report, Sterne Agee writes "We are taking our 2012 EPS expectation from $4.40 to $5.40, which is now 20% ahead of the consensus. We fully anticipate the majority, if not all of the existing options to be exercised by year-end, adding an additional $4.0 billion to the $6+ billion in offshore backlog already slated to be ordered in 2011 by the industry. Furthermore, we expect ongoing additions to the newbuild list as the industry grapples with the more than 20 billion barrels of deepwater reserves discovered but undeveloped in the past several years. Add the effects of the Brazilian deepwater aspirations (28 floaters in theory), and that provides for ongoing additions to backlog beyond 2012. While the probability of all 28 coming to market is uncertain, the timeline in which we learn of any deficiencies is elongated enough for the interim volume of orders to take center stage." Sterne Agee has also established a $90 price target on National Oilwell Varco, which closed Friday at $71.46.