McDermott International (MDR) Lowered to Sell at Zacks Investment Research

McDermott International (NYSE:MDR) was downgraded by Zacks Investment Research from a “hold” rating to a “sell” rating in a research report issued to clients and investors on Monday, January 8th.

According to Zacks, “Concerned about the high debt load which McDermott will end up assuming post its merger with Chicago Bridge &Iron, we are downgrading our investment thesis of MDR from 'Hold' to 'Sell'. Chicago Bridge carries high massive debt due to imprudent acquisition decisions in the past. Though MDR in itself displays strong financials, post merger the new entity will carry a debt load of around $2 billion which could mar its credit metrics. Further, MDR is also witnessing lumpiness in its backlog position which has dipped around 38.4% year-over-year. Lack of new deepwater drilling orders are starting to haunt the subsea part of the industry. As such, with a considerable portion of MDR’s current backlog associated with offshore operations, it remains susceptible to the pricing weakness. Thus we view McDermott as a risky bet which should be avoided for the time being.”

MDR has been the subject of several other research reports. KeyCorp reissued a “hold” rating on shares of McDermott International in a research report on Friday, November 10th. Credit Suisse Group dropped their price target on shares of McDermott International from $7.60 to $7.30 and set a “neutral” rating for the company in a research report on Thursday, November 2nd. Scotiabank reissued a “buy” rating and issued a $9.00 price target on shares of McDermott International in a research report on Wednesday, November 1st. ValuEngine lowered shares of McDermott International from a “strong-buy” rating to a “buy” rating in a research report on Wednesday, November 15th. Finally, Morgan Stanley reissued a “sell” rating on shares of McDermott International in a research report on Wednesday, December 20th. Three research analysts have rated the stock with a sell rating, five have given a hold rating and four have issued a buy rating to the stock. The company currently has an average rating of “Hold” and a consensus price target of $7.59.

McDermott International (MDR) traded up $0.09 during mid-day trading on Monday, reaching $7.79. 5,380,700 shares of the company’s stock were exchanged, compared to its average volume of 6,578,556. The company has a market capitalization of $2,210.00, a PE ratio of 14.70 and a beta of 1.35. The company has a debt-to-equity ratio of 0.30, a current ratio of 1.70 and a quick ratio of 1.70. McDermott International has a one year low of $5.56 and a one year high of $8.33.

McDermott International (NYSE:MDR) last announced its quarterly earnings data on Wednesday, November 1st. The oil and gas company reported $0.33 EPS for the quarter, beating the Zacks’ consensus estimate of $0.19 by $0.14. The business had revenue of $958.50 million during the quarter, compared to analyst estimates of $977.28 million. McDermott International had a net margin of 5.25% and a return on equity of 9.56%. The firm’s revenue for the quarter was up 71.6% on a year-over-year basis. During the same quarter in the prior year, the business earned $0.09 earnings per share. equities analysts forecast that McDermott International will post 0.53 earnings per share for the current fiscal year.

Several institutional investors and hedge funds have recently added to or reduced their stakes in MDR. Schwab Charles Investment Management Inc. grew its stake in shares of McDermott International by 4.0% during the second quarter. Schwab Charles Investment Management Inc. now owns 2,778,286 shares of the oil and gas company’s stock valued at $19,921,000 after purchasing an additional 107,473 shares during the last quarter. First Trust Advisors LP boosted its stake in McDermott International by 17.0% in the second quarter. First Trust Advisors LP now owns 279,708 shares of the oil and gas company’s stock valued at $2,006,000 after acquiring an additional 40,717 shares during the last quarter. Bank of New York Mellon Corp boosted its stake in McDermott International by 138.3% in the second quarter. Bank of New York Mellon Corp now owns 3,939,387 shares of the oil and gas company’s stock valued at $28,246,000 after acquiring an additional 2,286,320 shares during the last quarter. BNP Paribas Arbitrage SA boosted its stake in McDermott International by 1,122.2% in the second quarter. BNP Paribas Arbitrage SA now owns 91,504 shares of the oil and gas company’s stock valued at $656,000 after acquiring an additional 84,017 shares during the last quarter. Finally, Federated Investors Inc. PA boosted its position in shares of McDermott International by 2.0% during the second quarter. Federated Investors Inc. PA now owns 23,565 shares of the oil and gas company’s stock worth $169,000 after purchasing an additional 468 shares in the last quarter. 86.10% of the stock is currently owned by institutional investors and hedge funds.

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About McDermott International

McDermott International, Inc is a provider of integrated engineering, procurement, construction and installation (EPCI), front-end engineering and design (FEED) and module fabrication services for upstream field developments across the world. The Company delivers fixed and floating production facilities, pipeline installations and subsea systems from concept to commissioning for offshore and subsea oil and gas projects.

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