TD Cowen maintained its optimistic stance on Helix Energy (NYSE:HLX) Solutions Group, Inc. (NYSE:HLX) Tuesday, reiterating a Buy rating and a price target of $16.00.
The firm's outlook is buoyed by positive expectations in the Robotics division, contrasted by a more cautious view on the Shallow Water operations. The third quarter of 2024 is anticipated to perform well for Helix Energy, partly due to a season with few storm disruptions in the Gulf of Mexico (GoM).
The company is reportedly considering various strategic alternatives, including a potential sale, although this information has not been confirmed. According to a recent report by Bloomberg, Helix Energy is in the exploratory phase of this process. Analysts at TD Cowen believe that private equity firms or Subsea7 could emerge as the most probable purchasers if a sale were to occur.
The analyst's commentary highlighted several factors that could contribute to Helix Energy's favorable positioning in the market. Among these is the expected free cash flow (FCF) inflection point, the securing of new long-term contracts, and the expansion of the company's renewable energy business. These elements are anticipated to set Helix Energy apart as a relative winner in its sector.
In other recent news, Helix Energy Solutions revealed robust Q2 2024 results with revenues reaching $365 million, a gross profit of $75 million, and net income standing at $32 million. The 2024 revenue guidance was updated to be between $1.25 billion and $1.4 billion, with an EBITDA forecast ranging from $270 million to $330 million.
Additionally, Helix Energy Solutions announced the resignation of Amerino Gatti from its Board of Directors, reducing the board size from eight to seven directors. The company also secured new vessel charter and service contracts valued at approximately $786 million with Petrobras for its Siem Helix 1 and Siem Helix 2 vessels.
In a move to enhance its financial flexibility, the company amended its credit agreement, extending the maturity date and increasing its letter of credit capacity. Helix Energy Solutions is also in advanced discussions to secure market rate contracts for well intervention assets and is considering adding more assets to meet the growing demand in the wind farm market.
These recent developments reflect the company's strong cash and liquidity positions, with $275 million in cash and $370 million in total liquidity. Despite the current market conditions, the company remains optimistic about a demand rebound in the shallow water Gulf of Mexico abandonment market in 2025.
InvestingPro Insights
To enrich the analysis of Helix Energy Solutions Group, Inc. (NYSE:HLX), let's consider some key financial metrics and expert insights from InvestingPro.
According to InvestingPro data, Helix Energy's market capitalization stands at $1.62 billion, with a revenue of $1.39 billion for the last twelve months as of Q2 2024. The company has demonstrated strong revenue growth, with a 24.35% increase over the same period. This aligns with TD Cowen's optimistic outlook on the company's performance.
An InvestingPro Tip suggests that net income is expected to grow this year, which supports the analyst's positive stance on Helix Energy's future prospects. This expectation of profitability is further reinforced by another InvestingPro Tip indicating that analysts predict the company will be profitable this year, despite not being profitable over the last twelve months.
The company's P/E ratio (adjusted) of 23.56 for the last twelve months as of Q2 2024 suggests that investors are willing to pay a premium for Helix Energy's future earnings potential. This could be attributed to the anticipated free cash flow inflection point and the expansion of the renewable energy business mentioned in the article.
It's worth noting that InvestingPro offers 7 additional tips for Helix Energy, providing investors with a more comprehensive analysis of the company's financial health and market position.
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