Citigroup Reports on McDermott International (MDR)

Citigroup commented on McDermott International MDR in a report released today. In the report, Citigroup was slightly positive in its outlook of the company. Citigroup writes, “Since 5/10/11 MDR shares have generated a total return of (11.5%). In comparison, the S&P 500 and the E&C peer group have generated total returns of (2.0%) and (5.0%), respectively over the same time period. Our 12-month target price is $33.50 per share. Our target price assumes, applying a 19.0x P/E multiple to our one year forward, next twelve months EPS estimate of $1.76 per share. Our target multiple is at a modest discount to the select peer group average but is above the average recovery phase and historical multiple of the select peer group of roughly 16.5x. This reflects our view that the fundamental landscape in the Oil & Gas end market continues to improve. Moreover, MDR has market-leading exposure to one of the most favorable E&C end markets, and is geographically diversified with a strong client base in developing countries.” Citigroup has a Buy/Speculative rating on MDR and a target price of $33.50. Shares of MDR closed the trading day at $19.98, down $0.10 from the opening bell.