smashes guidance, page-11

The analysts are divided on NWH. Macquarie, UBS, Patersons and likely others have stated this week that they have a positive short and mid-term outlook. (I recall a news clip that Deutsche is also positive short and mid-term.) All refer to the company's current 2013 order book ($1.3B) and company guidance of 15-20% above that (noting that NWH tends to have conservative guidance numbers). The positive analysts have target prices ranging from about $3.80 to $5.15.

Beyond the 2013 order book, the positive analysts also point out indications of good 2014 results, including:
-- partially filled order book (i.e. $2B, of which only $1.3B is 2013)
-- expanding beyond WA iron ore into O&G and Queensland businesses
-- lower biz development costs through long-term relationships (preferred vendor status)
-- mgt's track record of growth
-- at least one analyst weighs in that the resources downturn is overstated regarding effects on size and number of future contracts.

But at least two analysts are less confident beyond 2013. Credit Suisse downgraded NWH to HOLD this week (target: $3.15), based on their estimate that the company would have to win half of all tenders of its current client group to maintain current results. Investors 1st had HOLD previously and maintains it, mainly due to risks of a faltering resources contracts and "opaque" outlook beyond mid-2014 (target: $3.20, down from $3.40).

Beyond these equivocal (but generally positive) analyst recommendations, we live in a market that is shunning the mining industry, so company valuations will be understated for a while. A P/E ratio above 9 will look expensive when it would be dirt cheap most other times in history. (NWH has a P/E ratio of about 8.3 right now).

As always, please do your own research.