Market Overview

Stifel: SEACOR Has Been Hot Lately, But Buying At This Price Could Burn You

Stifel: SEACOR Has Been Hot Lately, But Buying At This Price Could Burn You
Related CKH
Benzinga's Top Upgrades, Downgrades For November 6, 2017
SEACOR Holdings (CKH): An Off-the-Radar Potential Winner

While Seacor Holdings, Inc. (NYSE: CKH) has been benefiting from a host of factors, the company's near-term potential is priced in, according to Stifel.

The firm downgraded Seacor Holdings from Buy to Hold and raised its price target from $40 to $53. 

SEACOR is experiencing a hurricane-induced increase in Caribbean and Puerto Rican trade, as well as in its disaster recovery and barge businesses, analyst Benjamin Nolan said in a Sunday note.

The Fort Lauderdale-based company's growth areas could include U.S. government business, rail ferries and consolidation opportunities, Nolan said. (See Nolan's track record here.) 

All of these options represent the possibility of future earnings growth for SEACOR, the analyst said. 

The Hurricane Impact 

SEACOR's third-quarter earnings, reported Nov. 1 after the close, slightly missed estimates, according to Stifel. The company lost $8.1 million on a mark-to-market their ownership of Dorain LPG, which had a $0.46 per share effect, Nolan said. 

That said, the shipping business beat Stifel estimates by $4.8 million.

Stifel adjusted its estimates for the company due to a trio of factors. The barge business is improving in both rates and volume, most notably in St. Louis, Nolan said. The firm also expects SEACOR to start receiving windfall profits from Witt O'Brien's, a SEACOR-owned emergency management and disaster company, as communities clean up after a major hurricane season. 

Caribbean and Puerto Rico container trade are likely to remain stronger due to the rebuilding occurring after serious destruction on a number of islands. To reflect the business' earnings potential, Stifel upwardly adjusted its estimates and also its price target for the shares.

Despite the healthy business climate, SEACOR's valuation is starting to be stretched, Nolan said.

The spinning off of the offshore business has done its job, as the market has re-rated the company's shares quickly on its own earnings potential, Nolan said. 

"At 60.9 times 2018 earnings and 33.6 times 2019 earnings and 126 percent of book value, we see much of that healthy business is already built into the price of the shares." 

SEACOR could judiciously use the higher stock price to make further bolt-on acquisitions, Nolan said. Given the stock run, the analyst is of the view that the valuation doesn't provide a margin of safety. Before going long on the shares, Nolan said he'd like to see continued better operations or a change in valuation.

Related Links:

Imperial Initiates Coverage Of Oil & Oilfield Services Companies

Elon Musk Offers To Rebuild Puerto Rico's Energy Infrastructure

Latest Ratings for CKH

Nov 2017Stifel NicolausDowngradesBuyHold
Nov 2017Credit SuisseMaintainsNeutral
Aug 2016Stifel NicolausInitiates Coverage onHold

View More Analyst Ratings for CKH
View the Latest Analyst Ratings

Posted-In: Benjamin Nolan Frank Galanti Seacor StifelAnalyst Color Downgrades Price Target Analyst Ratings Best of Benzinga


Related Articles (CKH)

View Comments and Join the Discussion!

Latest Ratings

CNPRBC CapitalUpgrades34.0
View the Latest Analytics Ratings
Don't Miss Out!
Join Our Newsletter
Subscribe to:
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
Your weekly roundup of hot topics in the exciting world of fintech.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

5 Biggest Price Target Changes For Monday

Helios & Matheson Ups Its Stake In MoviePass Again