UniCredit Bank Reiterates its HOLD Rating on Aker Solutions

October 12 00:00 2011

LONDON, October 12, (RainbowNewsLine.com) – Analyst David Thomas of UniCredit Equity Research reiterates his HOLD rating on the shares of Aker Solutions (OSL: AKSO). The target price is set to NOK90.

In a research note published this morning, analyst David Thomas mentions that the company is to take a further loss provision of NOK400- 500 million of loss provisions at EBIT and EBITDA level in Q3 results due to problems related to supplying subsea equipment to Petrobras. This will lead to a potential downgrade of 15-18% at EBIT and 18-21% at net income levels for the FY11 results, the analyst says.

The analyst has downgraded the ’11 market estimates, which are 10% below the consensus, and similar downside risk for ’12, which is 15% below the consensus. However, financials are the tip of the iceberg; AKSO has a past of disappointing market before with its lack of management controls and absence of an independent CEO, the analyst says.

The analyst believes that Aker Solutions’ shares are trading at a discount when compared to its peers but he finds no compelling reason to buy them instead. The analyst points investors towards Subsea 7 and Technip as much safer options.

INVESTMENT HIGHLIGHTS

  • Corporate governance concerns remain a drag
  • History of profit warnings seems to be recurring

 STOCK TRIGGERS

  • New CEO announcement – timing uncertain
  • Improvement in margin delivery in subsea & drilling segments
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