Friday - BTIG has increased its price target on Tidewater Inc shares (NYSE:TDW) to $130 from $110, while maintaining a Buy rating on the stock. The adjustment follows recent investor meetings with the company’s management, where they presented an optimistic outlook similar to the tone set during last week's earnings call.
Tidewater's management emphasized the broad-based rate improvements across its fleet, particularly with Anchor Handling Tug Supply vessels (AHTSs), and highlighted strong performance in regions such as South America and West Africa.
Management shared that the blended average leading edge rate for the fleet is currently around $31,000 per day, a significant increase from the high $20,000s in the second half of 2023. This rate represents a more than 50% rise over the average rate of approximately $20,000 earned in the first quarter of 2024.
The average contract duration for the fleet is around 1.5 years, which suggests that the average dayrate earned by the fleet should continue to rise sequentially over the next two years. This projection does not account for any further price increases, which are anticipated this year and the next.
The report also noted that although the majority of the fleet's contracts will reset in the next 1.5 years, some larger vessels are tied to longer-term contracts that will not expire until late 2025 or 2026. After a recent visit to China by the management, it was observed that the orderbook for Offshore Support Vessels (OSVs) remains near all-time lows. Any significant increase in the supply of new large vessels is not expected for at least another 2-3 years.
Moreover, Tidewater is committed to returning cash to shareholders and intends to negotiate the removal of restrictive debt covenants that currently cap the return of net income to shareholders at 50%.
The company is also actively monitoring the Mergers and Acquisitions (M&A) landscape, which has seen increased activity. While there are opportunities globally, the company's preference appears to be more towards the Atlantic basin rather than the Middle East.
In conclusion, BTIG reiterated its Buy rating on Tidewater Inc and raised its price target, reflecting the company's positive operational developments and strategic initiatives.
InvestingPro Insights
Following BTIG's optimistic outlook on Tidewater Inc (NYSE:TDW), recent data from InvestingPro further corroborates the company's strong performance and potential for growth. Notably, Tidewater's market capitalization stands at $5.64 billion, reflecting its substantial presence in the industry.
The company's impressive revenue growth of 54.82% over the last twelve months as of Q1 2024 indicates a robust expansion in its operations. This is further supported by a significant quarterly revenue growth of 66.32% in Q1 2024, showcasing the company's ability to scale effectively.
InvestingPro Tips highlight Tidewater's high return over the last year, with a 128.42% price total return, emphasizing the company's strong market performance. Moreover, the company is trading near its 52-week high, at 96.01% of this peak, signaling investor confidence in its current trajectory.
For those considering capitalizing on Tidewater's growth, it is worth noting that analysts predict the company will be profitable this year, and it has been profitable over the last twelve months. With these insights, investors may find Tidewater an attractive option, especially when considering that InvestingPro offers 15 additional tips to help make informed decisions.
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