(Adds analyst's comments, updates share movement)
By Ajay Kamalakaran
BANGALORE May 27 Drilling equipment maker
Flotek Industries Inc (FTK.N) lowered its 2008 earnings outlook
citing weak first-quarter results and a higher interest rate
cost for a convertible debenture, sending its shares down as
much as 19 percent.
The company said it expects 2008 earnings of $1.12 to $1.22
a share, compared with its previous forecast of $1.50 to $1.60
a share. Analysts on average had expected earnings of $1.27 a
share, according to Reuters Estimates.
"I think that the Street was widely expecting this downward
revision and it was a question of how much and I think where
they have placed guidance is pretty much right in the way of
where the Street was expecting," analyst Mark Brown of
Pritchard Capital Partners said from New York.
"This is a stock that has been beaten down tremendously
ever since October when it was trading at $55 and started
missing earnings in the third quarter and fourth quarter of
2007," Brown said.
Earlier this month, Flotek, whose shares have lost more
than two-thirds of their value since hitting their highs in
October, reported first-quarter profit of 18 cents a share,
below analysts' average estimate of 24 cents a share.
The company, which caters to the oil, gas and mining
industries, blamed a delay in parts for the downhole tools
segment and higher corporate costs for its weak results.
But Brown was optimistic on the stock. "I think that there
are a number of drivers of growth that the investor community
may start to revisit once all the bad news surrounding the
earnings guidance settles."
The analyst identified Flotek's contracts for its
microemulsion products with Halliburton Energy Services and
international expansion as some of the growth drivers.
"The company... is hoping to get 10 percent to 12 percent
of their revenue internationally by the end of '08, from 7
percent last year," Brown said.
In February, Houston-based Flotek agreed to buy Teledrift
Inc for $95.2 million to expand its offering of downhole
drilling tools and boost international sales.
The company's shares fell to $15.61, before recovering some
losses to trade down $2.42 at $16.75, making them the top
percentage loser on the New York Stock Exchange.
"There's so much negativity around the stock, I actually
think that the pullback they've received makes for a good
buying opportunity," Brown said.
(Editing by Deepak Kannan, Amitha Rajan)