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Oceaneering International: 5% of the Analysts Gave a ‘Sell’ Rating

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Analysts’ rating for Oceaneering International

Oceaneering International (OII) is fifth in terms of the highest “sell” recommendations assigned by sell-side analysts in the OFS (oilfield equipment and services) industry. Approximately 5% of the analysts tracking Oceaneering International recommended a “sell” or some equivalent as of June 25. Approximately 80% of the analysts recommended a “hold,” while 15% recommended a “buy” or some equivalent. Analysts’ consensus target price for Oceaneering International was ~$20.5 as of June 25. Currently, Oceaneering International is trading near $23.5, which implies 13% downside over the next 12 months at the current price.

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How the rating has changed

On March 25–June 25, the percentage of analysts recommending a “sell” or some equivalent for Oceaneering International decreased from 13% to 5%. Analysts’ “buy” recommendations increased during the same period. A year ago, ~14% of the sell-side analysts recommended a “sell” for Oceaneering International.

Opportunities and challenges 

Oceaneering International’s main concern is its Subsea Products segment, which is expected to incur an operating loss in the second quarter due to lower revenues. Management estimates ROV (remotely operated vehicle) fleet utilization to be in the low 50% range and the ROV EBITDA margin to be in the low 30% range for 2018. Management also expects the number of floating contracted rigs to decline in 2018, which could have a negative impact on its ROVs on floating contracts. In all of Oceaneering International’s other segments, management expects the operating results to improve in 2018.

By the end of the first quarter, Oceaneering International confirmed its previous guidance for 2018. The company expects positive EBITDA contributions from each of the operating segments, which explains why 80% of the sell-side analysts gave the company a “hold” rating.

Highest “hold” ratings in the OFS industry

All of the sell-side analysts rated CARBO Ceramics (CRR) as a “hold” as of June 25. Approximately 76% of the analysts rated National Oilwell Varco (NOV) as a “hold.”

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