ENSCO Int'l Valuation Attractive

We are maintaining our Buy recommendation on ENSCO International (ESV - Analyst Report) shares following the company's 4th-quarter results, which benefited from healthy rig demand and higher dayrates. We continue to like the stock for the strong performance of its premium jackup rigs, an exceptionally strong balance sheet and robust cash flows.

Given ENSCO's high contract coverage for its premium jackup fleet and a growing deepwater drilling exposure, the company is expected to fare relatively better than many of its peers in the current environment of commodity-price weakness and credit market turmoil.

On the whole, we believe that the upside potential far outweighs the downside risks at current levels. Our new $40 price objective, reduced from $50 before, results from 2009 P/E and EV/EBITDA multiples of 5.6x and 4.0x, respectively, both well within historical trading ranges.

Read the full analyst report on ESV