UPDATE: KeyBanc Downgrades McDermott International to Hold after Lowered EPS Estimates

In a report published Monday, KeyBanc downgraded its rating on McDermott International MDR from Buy to Hold, and removed its $17.00 price target. KeyBanc noted, “Our estimates compare to consensus of $0.84 and $1.17, respectively. We think it is important to point out the following points, in regard to MDR and our rating to help put our outlook into perspective alongside MDR's potential; 1) Our Rating Change is Predicated on Incremental Risk Around 2H13/2014 Margins; 2) MDR is Trading Close to Our Estimate of Liquidation Value, Assuming No Material Losses; and 3) MDR's Strategy Remains Sound, Execution Carries More Risk – we want to emphasize that, in our opinion, MDR's strategy remains sound, as in when transitioning to deeper water activity where there are limited players and the outlook is very strong. Our rating change reflects on a greater level of risk as MDR executes on this strategy over the next couple of years.” McDermott International closed on Friday at $10.70.