UPDATE: D.A. Davidson Downgrades McDermott International on Risks Associated With Backlog

In a report published on Tuesday, D.A. Davidson analyst John B. Rogers downgraded McDermott International (NYSE: MDR) from Buy to Neutral and lowered the price target from $14 to $7.25.

In the report, D.A. Davidson commented, "Risks warrant caution; downgrading shares to NEUTRAL from Buy. We are reducing our rating and target on these shares based on the risks associated withremaining work in backlog as well as timing of the planned improvements. Weare reducing our price target to $7.25, from $14, or approximately book value.  The shares could be worth much more if the company’s initiatives yield higher margins, but the timing of recovery seems uncertain based on recent performance. Alternatively, McDermott could seek a merger or sale of the company at higher levels based on underlying asset values, but the lack of sustained profits could limit interest."

McDermott International closed Monday at $8.73.