Credit Suisse Upgrades Helix Energy To Outperform, Price Target Doubled To $10

Credit Suisse’s Gregory Lewis believes that well intervention is an effective means of boosting volumes and slowing the decline in rates of old wells. The analyst upgraded the rating for Helix Energy Solutions Group Inc HLX from Neutral to Outperform, while raising the price target from. $5 to $10.

Well Intervention Prospects

Analyst Gregory Lewis cited Helix Energy’s leading position in the well intervention segment as the reason for the upgrade in rating. An increase in oil prices is expected to boost well intervention activity and benefit Helix Energy.

“With many deepwater wells now 8-9 years old, they are in need of well intervention which should boost volumes allowing oil companies to slowdown decline rates,” Lewis wrote. He expects 2016 to be the earnings trough for Helix Energy as the well intervention activity picks up in 2017.

The EPS estimates for 2016 and 2017 have been raised from ($0.70) to ($0.50) and from ($0.64) to ($0.15), respectively.

“Our sum of parts analysis values the Well Intervention at $4/share, Robotics at $3/share, and Production Facilities at $3/share. Our SOP estimate excludes $495M in cash ($5/share),” the Credit Suisse report mentioned.