Smith International climbs after big selloff

Smith International jumps as analyst upgrades stock following big decline from Tuesday

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NEW YORK (AP) -- Shares of Smith International Inc. on Wednesday recovered from some of Tuesday's decline as an analyst upgraded the oil service company, calling its share price attractive.

Shares climbed 97 cents, or 3.6 percent, to $27.83 in morning trading. The stock lost 13 percent on Tuesday after Smith said it had offered 28 million shares of its common stock.

In a note to investors, Citi Investment Research analyst Robin Shoemaker said the sell-off presents an opportunity for investors to snap up the stock, which he believes could bounce back in 2010.

"While Smith has been one of the worst performing oil service stocks in 2009, its poor operating results and its need for new equity capital are reflected in its current share price," Shoemaker said. He upgraded the stock to "Buy" from "Hold." He also raised his share price target to $35 from $29.

Shoemaker also noted that the company's expertise in drilling fluids and bits makes it an ideal target for a merger or acquisition, even though the stock offering "clearly signals its desire to move forward on its own in the next phase of the business cycle."

Still, Shoemaker warned, "If Smith stumbles next year, pressures to merge could build quickly."