Trico Marine Services, Inc. - Deutsche Banc Alex. Brown's Wes Maat Initiates Research Coverage
NEW YORK, Sept. 28 /PRNewswire/ -- Deutsche Banc Alex. Brown analyst Wes Maat today initiated coverage of Trico Marine Services, Inc. (Nasdaq: TMAR - news; $16.06) with a STRONG BUY investment rating on the shares. With a fleet of 94 offshore supply vessels, Trico Marine is leading provider of offshore supply vessels, particularly in the Gulf of Mexico, the North Sea and Latin America.
Maat's STRONG BUY rating on the shares of Trico Marine relates to four principal reasons:
1) Trico's substantial earnings leverage to offshore rig activities,
particularly in the U.S. Gulf Mexico and the North Sea;
2) the potential upside to Trico's earnings over the next few years as a
result of expansion opportunities in the deepwater markets of West
Africa and Brazil;
3) the company's projected significant earnings recovery in 2000-2001, and
4) the stock's significant valuation discount versus many offshore service
providers (in terms of price to 2001E cash flow and TEV/2001E EBITDA).
``We believe that the Street has overly penalized supply vessel providers such as Trico due to concerns that a substantial number of idle vessel capacity will soon be reactivated, potentially leading to a reversal in dayrates, as well as fears stemming from newbuild capacity being added to the market over the next few years,'' said Maat. ``We believe that such investor fears and the resulting valuation discounts are misplaced given the continued very tight Gulf Coast labor markets, which have to date effectively prevented marine supply vessel providers from reactivating idle vessels. We also believe that newbuild vessels are unlikely to materially impact the utilization/dayrate levels for most existing vessels given that the specifications for the newer vessels materially exceed those of most current vessels.''
Maat's 12-18 price target is $20 per share, which assumes a 2001E EBITDA multiple of 9x, a 2001E operating cash flow multiple of 8.5x, and a 2001E EPS multiple of about 30x. |
