Salomon Smith Barney upgraded Varco International (VRC) to outperform. The brokerage firm downgraded Universal Compression (UCO) to in-line, and downgraded Weatherford International (WFT) to underperform.
Analyst Geoff Kieburtz cites valuations for these providers of services to the gas and oil industry. He cut the industry group to market weight from overweight due to above-average valuations, strong year-to-date outperformance vs. the broader market, and heightened political risk. Kieburtz says his latest exploration and production (E&P) survey sees worldwide spending growth of 3.8% in 2003, at the low end of his earlier 4% to 6% estimated range. Due to weak spending results from the survey, Kieburtz cut his 2003 worldwide rig count estimate to 1,935 from 2,090, or 7%; he also cut his 2003 earnings per share estimates on 12 companies by an average of 11%.