Jefferies Reiterates Buy Rating on Ensco plc (ESV)

Jefferies & Company is out with a research report this morning, where it reiterates its Buy rating on Ensco plc ESV; it has a $62.00 price target on the stock. The Jefferies analysts said that ESV remains their favorite offshore driller due to upside from the jack-up market in 2011, the value creation from the expansion of its UDW fleet, and an attractive valuation. They added that the stock has also been trading well below historical averages at similar points in the cycle and pays an attractive dividend at 3%. As for valuation, the analysts remarked, “ESV shares remain attractively valued at 5.1x our 2012 TEV/EBITDA and 92% of NAV, well below previous mid-cycle valuations of 6-7x 2012 TEV/EBITDA and 110-130% of NAV in 2002-03 and late-2005-07. Our 12-month PT of $62 is based on approx. 7x our 2012 TEV/EBITDA estimate, 125% of NAV, and 90% of repl. value.”