Zacks Investment Research downgraded
), an energy-focused engineering and construction firm, to a
Zacks Rank #4 (Sell) on Apr 6, 2013.
CALUMET SPECLTY (CLMT): Free Stock Analysis
HELMERICH&PAYNE (HP): Free Stock Analysis
MCDERMOTT INTL (MDR): Free Stock Analysis
STONE ENERGY CP (SGY): Free Stock Analysis
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Why the Downgrade?
During the fourth-quarter 2013 earnings release, McDermott
reported total costs and expenses to be roughly $913.0 million,
which represents a significant increase of 17.1%, compared to the
Besides that, McDermott derives its revenues from companies in
the oil and gas exploration and production (E&P) industry, a
highly volatile and cyclical sector that is directly exposed to
commodity prices. A potential drop in oil and gas prices could
curtail deepwater drilling and subsea equipment demand, adversely
affecting bookings at McDermott.
Moreover, McDermott has hinted toward revenue of $3 billion in
2013, lower than the $3.6 billion in 2012, mainly due to
uncertainty around the timing of some of the company's bigger
Additionally, McDermott foresees the large Papa Terra project in
Brazil to contribute to its earnings by late 2013 or start of
2014, as against the previous assumption of an earlier timeframe,
which is reflected in the company's expectation of negative
long-term sales growth rate of 16.6%.
The Zacks Consensus Estimate for first-quarter 2013 has decreased
20% to 16 cents per share over the last 60 days. For 2013, all
the estimates (10 out of 10) were revised downward over the last
60 days, sinking the Zacks Consensus Estimate by 15.9% to 74
cents per share.
Stocks to Consider
Three firms in the energy sector that are expected to
significantly outperform the U.S. equity markets in the next one
to three months are
Helmerich & Payne Inc
Calumet Specialty Products Partners LP
Stone Energy Corp.
). All three stocks carry a Zacks Rank #1 (Strong Buy).