Shares of onshore drilling contractor Patterson-UTI Energy Inc. dropped along with the broader market Tuesday after Credit Suisse downgraded the company, citing shrinking market share and rising oil industry capacity.
Analyst Arun Jayaram downgraded Patterson shares to "Underperform" from "Neutral," lowered his 2007 and 2008 earnings estimates and cut his target price to $22 per share from $31. Jayaram said the company is operating a smaller number of onshore oil rigs than in November, while its competitors are gaining ground.
"Apparent share losses and industry capacity additions are taking an even greater bite out of Patterson's earnings power than we previously expected," Jayaram said.
The Snyder, Texas, company's margins and revenue per day also dropped during the fourth quarter, and Jayaram expects that decline to get steeper in the first quarter of 2007. He also thinks the stock is trading at a premium compared to its competition.
Patterson-UTI shares fell $1.14, or 4.8 percent, to $22.88 on the Nasdaq Stock Market.
Your Ads At Here
