Jefferies Raises Estimates & Price Target on RigNet (RNET), Ensco (ESV) & Pride (PDE) Acquisition Is Positive 8:11 am ET 03/30/2011- StreetInsider
Jefferies is maintaining its Buy rating on shares of Rignet, Inc. (NASDAQ: RNET) as the company posted its Q4 results slightly ahead of the firms estimates.
The firm believes that the Ensco's (NYSE: ESV) acquisition of Pride (NYSE: PDE) is a positive for RNET since it already services 100% of ESV's fleet. Jefferies feels that Ensco will migrate Prides 16 floaters and 7 jackups to the RigNet solution. Pride is currently building 3 more rigs which are expects to RigNet services also.
The firm notes that the Hercules (NASDAQ: HERO) and Seahawk acquisition is also a slightly positive for RNET as the company already services both company's and is anticipated to in the future.
Jefferies estimates that the additional rigs will bring in 10-$12 million in incremental revenue and $6.5-$8 million in incremental gross profit yearly. The firm is raising its 2011 and 2012 EPS estimates from $0.49 and $0.77 to $0.57 and $0.80. Jefferies also raised its 2011 and 2012 revenues estimates from $98.7 million and $108.9 million to $102.1 million and $112.5 million. To go inline with its new estimates, it's raising its price target from $17 to $21.