UPDATE: Morgan Stanley Downgrades Helix Energy Solutions

Morgan Stanley downgraded Helix Energy Solutions Group Inc HLX Wednesday from Overweight to Equal-weight and cut its price target from $32 a $31.

Analysts Ole Slorer and Igor Levi cut “estimates and PTs across our space due to lower oil prices, driving down FCF and thus spending levels.

“We have therefore lowered HLX’s 2015/16e EPS from $2.10/$2.55 to $2.08/$2.31; we are introducing a 2017e EPS of $2.75. Our new estimates assume some risk around North Sea vessels and slower ROV growth.”

The analyst report added that the “company has 80 percent of its sales exposed to life-of-field offshore spending, which we view as significantly less sensitive to lower oil prices than onshore spending or offshore exploration spending. We also note that most of HLX’s intervention vessels have 1-5 years of backlog, although we see risk around its Seawell and Skandi Constructor vessels, which have limited backlog in 2015.”

“We maintain our favorable view of HLX’s well intervention business model, which we see as (i) largely insulated from weakness in the offshore rig market, (ii) levered to defensive life-of-field work, and (iii) well poised to take market share from rigs, given increased efficiencies and lower building costs,” according to Slorer.

Helix Energy Solutions recently traded at $25.71, down 3.6 percent.