On Tuesday, BTIG adjusted its outlook on Tidewater Inc (NYSE:TDW), raising its price target to $110 from $90 while maintaining a Buy rating on the stock. The firm's analyst cited the company's strong year-to-date performance, with a notable 22% increase, which is significantly higher than the broader offshore field services (OFS) sector's performance.
Tidewater has been highlighted as a top pick to capitalize on the offshore oil services up-cycle. BTIG's analysis points to undervalued oil stocks and indicates that Tidewater's update is timely. The firm also referenced macroeconomic factors, including the International Energy Agency's (IEA) revised oil demand forecast for 2024, which now anticipates an increase of approximately 1.3 million barrels per day, marking a 9% year-over-year rise.
The firm's analyst emphasized that easing macro risks allow for a focus on the fundamentals of offshore support vessels (OSV), predicting an increase in boat demand. The 2024 average working floater count is estimated to show an 8% year-over-year increase. Further, subsea spending is expected to continue its upward trend with a projected 6% year-over-year increase.
With leading edge pricing for Large Platform Supply Vessels (PSVs) in various regions showing strong rates, Tidewater's fourth quarter 2023 average large PSV rate of $23,000 is anticipated to rise throughout this year and the next. The analyst provided a table illustrating the fleet's vessel level EBITDA, which suggests a potential of approximately $1.6 billion based on leading edge pricing, with expectations for further increases over the coming year.
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