UPDATE: Stifel Downgrades McDermott International to Hold, Removes PT on Lack of Credibility

In a report published Wednesday, Stifel analyst Robert Connors downgraded the rating on

from Buy to Hold, and removed the $12.00 price target. In the report, Stifel noted, “We are downgrading shares of MDR from Buy to Hold as a lack of execution credibility and feasible near term prospects provide little catalysts. MDR's execution mishaps within the past few years have been the result of underinvestment, increased competition, leading to a lack of management oversight and adherence to risk control practices. The company has begun the process of hiring outside project control managers but such efforts are in the early stages. Their first task will be to execute on the Ichthys LNG project which is now 3% complete but 39% of the backlog. Bids outstanding improved in the quarter to $8.1B, from $5.6B in 1Q13 but $2.7B relates to Chevron's Gendalo-Gehem project in which, according to recent press, MDR's bid validity has been challenged and management lacks clarity as to its eventual timing. 60% of the bids or $4.9B is for conventional work with the remaining 40% for prospects that lie within the non-traditional floating and subsea end markets, for which the company's current management structure is not up to par to execute, in our view. Recently, the company's win rate has plummeted and management expects further deterioration as bidding and risk control procedures are overhauled.” McDermott International closed on Tuesday at $6.93.