McDermott International (MDR) - Bear of the Day
02 September 2011 - 10:00AM
Zacks
Following a second quarter earnings miss, we are downgrading
McDermott International (MDR) shares to Underperform from
Neutral. The company recently reported lower-than-expected EPS for
the June quarter, adversely affected by a less favorable geographic
mix and weak margins in the Middle East.
Near-term bookings remain lumpy at McDermott, as the current
uncertain environment has hurt the economics of building new oil
and gas infrastructure. Additionally, the transfer of the power
generation and government operations has left McDermott with a less
diversified business, thereby heightening its risk profile.
These factors are reflected in our downgrade of the company's
shares. Our $12 price objective reflects a 2011 P/E multiple of
10.1x.
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