McDermott Cut to Underperform - Analyst Blog
17 Dezember 2012 - 5:38PM
Zacks
Given its erratic earnings trend over the last few quarters and
a disappointing outlook for 2013, we have downgraded the shares of
energy-focused engineering and construction firm McDermott
International (MDR) to Underperform from Neutral.
Incorporated in 1959, McDermott primarily serves the worldwide
offshore oil and gas field development activities, including
front-end design and detailed engineering, fabrication and
installation of offshore drilling and production facilities, as
well as installation of marine pipelines and subsea production
systems.
Additionally, the company provides project management and
procurement services. It operates in most major offshore oil and
gas producing regions, including the U.S., Mexico, Canada, the
Middle East, India, the Caspian Sea and Asia Pacific.
In August 2010, McDermott completed the spin-off of its ‘Power
Generation Systems’ and ‘Government Operations’ segments into a
separate, independent and publicly traded entity The
Babcock & Wilcox Company (BWC).
Though the energy-focused engineering and construction firm managed
to beat revenue estimates in the most recent quarter, it had to
deal with steeper operating costs. McDermott has already hinted
that its top line will suffer next year due to uncertainty
regarding the timing of big awards.
Near-term bookings also remain lumpy, as the current uncertain
environment has hurt the economics of building new oil and gas
infrastructure.
Moreover, we believe that the transfer of the power generation and
government operations (post-split) has left McDermott with a less
diversified business. As a result, the business risk profile of the
reorganized McDermott is weaker than its earlier form.
Given these concerns, we expect McDermott to perform below its
peers and industry levels in the coming months. As such, we see
little reason for investors to own the stock. Our new long-term
Underperform recommendation is supported by a Zacks #5 Rank
(short-term Strong Sell rating).
Partially offsetting these negatives are the company’s solid
margins, clean execution skills and expectations for accelerated
activity levels next year.
BABCOCK&WILCOX (BWC): Free Stock Analysis Report
MCDERMOTT INTL (MDR): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
McDermott (NYSE:MDR)
Historical Stock Chart
Von Jun 2024 bis Jul 2024
McDermott (NYSE:MDR)
Historical Stock Chart
Von Jul 2023 bis Jul 2024
Echtzeit-Nachrichten über McDermott International Inc (New York Börse): 0 Nachrichtenartikel
Weitere Mcdermott News-Artikel