I am initiating coverage on Precision Drilling Corporation (NYSE:PDS) with a 12-month target price of $18 and a return of 35%. Precision Drilling is currently trading at a multiple of 7.7x EV/EBITDA, 7.21x P/CF and 1.82x P/Tangible Book Value. At a target price of $18, the implied multiples are 9.7x EV/EBITDA, 9.5x P/CF and 2.4x P/Tangible Book Value. The target price was arrived at using the sum-of-parts approach, while independently valuing the two business segments of Precision Drilling, namely: Contract Drilling Services and Completion and Production Services. The WACC based DCF valuation methodology was applied for valuing the Contract Drilling segment and trading multiples methodology was used for...
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