AG Edwards upgrades seismic data service company Dawson Geophysical (DWSN) to buy from hold.
Analyst Poe Fratt says the combination of stock price, Dawson Geophysical's underperformance since mid-2004, and reasonable valuation makes its risk-reward profile attractive again.
He says the outlook for continued improvement in U.S. onshore seismic market intact is due to weak U.S. gas production and notes another crew was deployed in mid-May. He sees limited financial risk due to a strong balance sheet.
Fratt maintains his $1.55 fiscal 2005 (ending September) earnings per share, and his $2.35 fiscal 2006 earnings per share. He also keeps his $2.68 fiscal 2005 cash flow per share and $3.52 fiscal 2006 cash flow per share estimates. He has a $27 price objective.