strong 1h result, conservative guidance overpl

Interesting review from Bell Potter confirming that what happened on the sp shouldn't last, with a facts based price target of $4, and that BLY represents attractive value.
That's a bizarre market.
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Strong 1H result, conservative guidance overplayed

􀂄􀀃 Result beats on faster revenue recovery Boarts 1H underlying EBITDA of US$98m beat our US$90m expectation due to a better than forecast +50% increase in revenue. However, the margin recovery was less than expected as work continued on lower priced contracts signed in 2009. Our US$220m EBITDA forecast remains largely unchanged reflecting stronger Products division growth, offset by higher group costs. Our Drilling numbers are broadly unchanged and assume some pricing uplift in 2H and 75% rig utilisation.
􀂄􀀃 Our forecasts remain above upgraded guidance
Boarts full year EBITDA guidance of US$205m continues to look conservative to us (given our US$220m forecast) and may not fully take account of the current momentum in pricing. We note that guidance implies only low single digit growth in pricing through 2H. Importantly, we see further upside in FY11 as mining capex continues to pick-up globally. We believe FY11 forecasts are much more reflective of mid-cycle earnings and relevant to pricing the stock.
􀂄􀀃 Attractive value
Boart looks good value in our view, trading on 10x our FY11 EPS and offering average EPS growth of c.25%pa over the next 3 years. The stock is also currently reflecting an unwarranted 20% discount to peers.
􀂄􀀃 Valuation / Price target A$4.00 (unchanged)
Our DCF valuation is unchanged.