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On which basis do I think it is not worth much more than $5 ? on fundamentals.

BLY has a market cap of 2$B, so it is not like it will keep up the pace and move to $9 in the next 6 months.

In a previous posting, I had posted extracts of some BP research. Here it is again.

All of that said, I really like this stock, and its positioning... which is why I haven't sold any of my stock (I started buying at ipo at $1.85, and have averaged down many times since then). Somehow, I think it can get to the $5.50 level, looking at the chart. The results we will get on the 23rd will be good. The only question is: will it beat expectations ? I hope so, based on this commodity boom that doesn't seem to slow down.
We will find out shortly.



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Earnings leverage continues
„ Raising forecasts
We are increasing our earnings forecasts by c.5-15% over the next 2 years to
reflect a better than expected recovery in demand for drilling products and services
from rising mining capex budgets. Our FY10 EBITDA forecast is now
c.US$225m (was US$220m), compared to recent guidance for at least US$220m
(was US$205m). This also follows recent positive comments from other industry
players such as Major, Layne and Campbell Brothers.
„ Recovery in underlying drivers
Boart is currently seeing continued improvement in operating trends, with
December drilling activity expected to be better than the past 2 years. We expect
Boart to deliver c.45% growth in EBITDA in FY11, driven by: 1) ongoing
recovery in drill rig utilisation and price; and 2) higher demand for products.
„ Leverage to macro recovery
Boart provides leverage to a recovering macro environment over the next few years
as earnings continue to recover strongly due to rising global mining capex budgets.
The stock has historically traded on 10x through the cycle EBIT, which sees fair
value around A$4.70 based on our FY11 mid-cycle earnings, which also accords
with our current DCF valuation and price target.
„ Valuation / Price target A$4.70 (was A$3.80); downgrade to Neutral
DCF val?n rises for higher earnings forecasts and lower WACC (due to higher
equity market levels) since our last update in September.