Smith Int'l at Compelling Levels

Houston-based Smith International, Inc. (SII - Analyst Report) is a major oilfield services company, engaged in providing a comprehensive line of products and engineering services to the oil and gas exploration and production industry, as well as to the petrochemical and other related industries.

Our continued Buy recommendation on Smith International shares reflects our view that the company's growing Eastern Hemisphere revenue mix and investment-grade credit profile position it to better navigate the expected downturn in onshore North American activity levels.

The recent sell-off has made valuation very compelling for this quality oilfield service name, in our view. We have kept our 2008 EPS estimate unchanged, while lowered our 2009 earnings estimate to $3.60 from $4.40 to reflect an overall softening outlook for onshore activity levels.

Read the full analyst report on SII