Jefferies Reiterating Buy Rating On Ensco (ESV)

Jefferies is reiterating Ensco's ESV Buy rating after the company's announced acquisition of PDE. The Jefferies report states, “we are taking a more detailed look at the ESV-PDE combination and reiterating our Buy rating on ESV. Overall, we believe the Pride (PDE, $38.85, Hold) acquisition vaults ESV to become the new bellwether in the group due to fleet quality, management, and growth opportunities, which warrants a premium valuation.” “Although management cited $50MM in cost saving synergies to achieve 10% accretion on 2012 First Call estimates, we believe that the deal will ultimately prove to be 15+% accretive to 2012 EPS using cost savings of $150-200MM, which we believe is attainable. Assuming $125MM of cost savings, we estimate that ESV-PDE could generate over $6.00 in EPS in 2012.” Jefferies also maintained Ensco's $64 Price Target. Shares of Ensco are currently trading up 2% from Wednesday's close of $50.10.