FTI: Improved Valuations, Solid Outlook Intact

Analysts at Citigroup upgrade FMC Technologies FTI from "hold" to "buy," while reducing their estimates for the company. The target price for FTI has been reduced from $77 to $69. According to Citigroup, “Analysis indicates significant pent-up deepwater drilling demand remains. This supports our outlook for strong secular growth in subsea equipment orders…. Quest Offshore has significantly reduced its GOM subsea activity forecast as a result of the drilling moratorium. However, our analysis indicates that 20-30 rig years of pent up drilling demand remain on the books.” “Subsea markets are in the early stage of an up-cycle where shares typically trade at a meaningful premium to historical medians…. Effects of the drilling moratorium will modestly impact 2011/12 eps but longer-term benefits are likely. Declining deepwater dayrates boost drilling demand. When combined with increased subsea safety requirements, longer-term subsea equipment demand stands to receive a boost,” the analysts mention. Citigroup has lowered its EPS estimate for 2011 from $3.30 to $3.20, "in response to deferred GOM subsea demand.” More Analyst Ratings here