RBC Keeps Precision Drilling's Outperform Rating, C$150 Price Target
RBC Capital Markets on Wednesday retained Precision Drilling's (PD.TO) outperform rating and C$150 price target.RBC expects Precision's first-quarter results to have negative implications for the shares. The company's adjusted EBITDA of $124 million missed RBC's forecast of $129 million, while adjusted earnings of $1.34 per share was also below RBC's estimate of $2.22 per share.The miss and the year-over-year decline were primarily due to higher stock-based compensation expense, headwinds in the Middle East, and slight headline margin compression in North America, RBC said."PD's second quarter guidance also looks softer than our estimates at the margin given lower daily margins in U.S./Canada, lower active U.S. rig count, partially offset bystronger Canadian rig activity," RBC said."Admittedly, this view could prove myopic given the gathering rig demand tailwinds in the U.S., though we think the market will look for greater signals that revenue growth will be converted to earnings and free cash flow growth," RBC said.Precision traded at $129.60 per share at last look on the Toronto Stock Exchange.Price: $129.15, Change: $-10.88, Percent Change: -7.77%