RDC Rolling Up Quality Assets At Fair Price

Analysts at Pritchard Equity Research reiterate their "buy" rating on Rowan Companies Inc RDC. The target price for RDC is set to $27. According to Pritchard Equity Research, “Conservatively assuming Q1, Q3 and Q4 2011 start dates, dayrates of $330,000 per day along with $100,000 per day operating costs, appropriate increases in G&A, a portion of the debt is paid down and roughly $350 million is refinanced at a reasonable 8%, we expect the assets to add roughly 53 cents to our 2011 EPS estimate. The accretion in 2011 will be modestly offset over the next six-months by roughly 18 cents, according to our assumptions.” “RDC will acquire the three rigs at roughly a 24% discount to their original build cost, an 18 to 22% discount to today's construction cost, and a 6% discount to Seadrill's purchase of a similar asset earlier this year…. Given Keppel's reputation, the unlikelihood RDC would acquire the rigs far behind schedule, and the increasing bifurcation in the jackup market, we view these risks as minimal. RDC has identified 37 major projects for these assets, of which 15 are on long-term multiple year contracts,” the analysts mention. More Analyst Ratings here