CarolineC
Sep 3, 5:39 PM
$TDW BTIG's Gregory Lewis commented, "Following investor meetings with management last week, we upgrade TDW to Buy (from Neutral) on the back of what we expect to be a tightening OSV market (led by Large PSVs) over the next two years, which should see pricing inflect higher (see: August Offshore Monthly). While management has previously noted the potential for average fleet-wide pricing to increase from ~
$23K currently to ~
$30K over the next two years (think up roughly
$4K per year), even at half that pricing increase, we estimate the fleet should add roughly
$300M in EBITDA over that two-year period, which points to average annual EBITDA growth of ~20%-25%. Bottom line: after managing through a two-year soft patch in the market (we note we still expect TDW to generate ~
$250M in free cash flow this year, which points to a 5%-6% FCF yield), we expect pricing to pick up under a backdrop of increasing rig activity, incremental FPSO startups,
1 replies
