RPC, Inc (RES)

[eastunder]

Standpoint Research Starts RPC Inc. (RES) at Buy; Oversold Shares Present Opportunity


February 15, 2012 10:14 AM EST

Standpoint Research initiates coverage on RPC Inc. (NYSE: RES) with a Buy. PT $21.00.

Analyst, Ronnie Moas, said, "With Natural Gas trading at $2.50 and down 50% from June 2011 prices, we want to add a name that will benefit from a rebound there...RPC has been oversold on bad news and concerns with relative strength now in the bottom 10%...This oftentimes is a sign of a near-sighted market over-reaction...RES is a volatile stock and 71% of the shares are controlled by insiders; there has been no selling.

Five-year average ROE is 30%..The stock was recently hit on concerns CHK would cut spending by 25%, and CHK is RPC’s biggest customer (accounting for 10%-15% of revenues). In a worst-case scenario, RPC takes a 3%-4% hit to its top-line because of CHK. The company is not too concerned about spending cuts from other customers."