UPDATE: Global Hunter Securities Color On DRC Price Update

Global Hunter Securities, which raised its PT on shares of Dresser-Rand Group Inc. DRC, is providing some color on the stock.

“Dresser-Rand announced its acquisition of Grupo Guascor for $690MM (inclusive of $172MM in assumed debt) in stock and cash. The deal will consist of $283MM in cash and 5 million DRC shares,” Global writes.

“We view this transaction favorably but, given the size of the deal, we see fewer near-term meaningful growth opportunities for DRC with cash flow likely dedicated to paying down debt,” Global adds. “Still, the company is positioned to continue to steadily grow earnings, and its plan to double the size of the company is one year ahead of schedule (now four years) given the impact of Grupo Guascor.”

Global also stated, “We continue to believe in DRC as a solid play in the oil and gas equipment business, but we maintain our Neutral rating based on valuation suggesting a $51 price target.”

DRC closed on Monday at $53.11.