PRECISION STOCK UPGRADED

Precision Drilling Corp. was upgraded to outperform from market perform at Raymond James after Canada’s largest contract driller and well service operator reported below-consensus first quarter results.

The stock is down about five per cent since the earnings report on Monday, but analyst Andrew Bradford believes there was little in Q1 that should alter the outlook for the company. Telling clients Precision has moved into “attractive value territory,” Bradford noted the earnings miss was largely the result of one-time costs and certification expenses in the U.S.

“We don’t expect these factors to have a meaningful effort on Precision’s future cash flows,” the analyst said in a report.

He did caution that investors should expect an earnings drag, as the many rigs shut down during the oil price downturn need to be re-certified.

However, as payments to drilling contractors continue to rise, these costs should be recouped more quickly.