UPDATE: Morgan Stanley Initiates Coverage on Independence Contract Drilling with Overweight Rating, $16 PT on Interesting Small-Cap Opportunity

In a report published Tuesday, Morgan Stanley analyst Ole Slorer initiated coverage on Independence Contract Drilling ICD with an Overweight rating and $16.00 price target. In the report, Morgan Stanley noted, “ICD is currently trading at an EV/rig of $29m, well below HP at $34m. Strong fleet growth and cash flow should drive EV/rig to $26m by 4Q14 and to $22m by Y/E 2016. With a brand new fleet of ‘walking rigs' and big Permian exposure, we see ICD as an interesting small-cap opportunity.” Independence Contract Drilling closed on Friday at $11.50.