NEW YORK (TheStreet) -- Shares of Cameron International Corp. (CAM) are up 1.85% to $45.61 after Barclays upgraded the company today to "overweight" from "equal-weight" and raised its price target to $60 from $58.
"We have upgraded Cameron International with our DCF valuation showing 34% potential upside on our revised earnings estimates. While the company did not provide explicit EPS guidance, we were given more than enough details on orders and short-cycle revenue to model the next several years with greater confidence, and it was better than expected," Barclays said.
While investors are questioning the longer-term economic viability of offshore development and International Oil Companies' "recalibrating" projects, Cameron still thinks it could see higher year-to-year orders in subsea if one or two big projects move ahead, analysts said.
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New segment reporting provides "much greater insight" and "underappreciated strong" free cash flow generation, analysts said, adding that the company has "plenty of buyback firepower" with $1.5 billion in cash, $600 million in divestiture proceeds to be booked and almost $900 million in cash generation expected in 2015.
Barclays lowered its 2015/16 EPS to $3.15/$2.95 from $3.40/$3.45.
Houston, TX-based Cameron International provides flow equipment products, systems and services to global oil, gas and process industries through three business segments: Drilling and Production Systems (DPS), Valves & Measurement (V&M) and Process & Compression Systems (PCS).
Separately, TheStreet Ratings team rates CAMERON INTERNATIONAL CORP as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate CAMERON INTERNATIONAL CORP (CAM) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its increase in net income, attractive valuation levels and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and poor profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Energy Equipment & Services industry average. The net income increased by 14.6% when compared to the same quarter one year prior, going from $220.80 million to $253.00 million.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Energy Equipment & Services industry and the overall market on the basis of return on equity, CAMERON INTERNATIONAL CORP has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- The gross profit margin for CAMERON INTERNATIONAL CORP is currently lower than what is desirable, coming in at 27.92%. Regardless of CAM's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, CAM's net profit margin of 9.02% compares favorably to the industry average.
- CAM's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 25.56%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
- You can view the full analysis from the report here: CAM Ratings Report