Friday, October 29, 2010

Hercules Offshore (Nasdaq:HERO) EPS Estimates Lowered for 2011

Hercules Offshore, Inc. (Nasdaq:HERO) faces a number of challenges going forward, even though their third-quarter results beat expectations, although they were fairly low to begin with.

Global Hunter said, "HERO reported a 3Q EPS (loss) of ($0.13), ahead of our expectations of ($0.20) and consensus at ($0.17). With revenue largely in line ($168MM vs $170MM exp), HERO beat our expectations on costs ($124MM vs $129MM exp), as well as D&A and tax benefit. However, near-term concerns loom given the potential for a covenant breach, a US jackup slowdown with low/mid $3 gas and lower international dayrates. We are trimming our 2011 EPS estimate to ($0.40) from a ($0.28) and lowering our price target to $3.10. Given meaningful upside still, we reiterate our rating."

Global maintained their "Buy" on Hercules, although lowering their price target from $3.60 to $3.10. The oil and gas services company closed at $2.31, dropping $0.07, or 2.94 percent.

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