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On Monday, Morgan Stanley (NYSE:MS) analysts initiated coverage on SBM Offshore NV (SBMO:NA) (OTC:SBFFY) with an Overweight rating and a price target of €29.00. The analysts highlighted the company’s strong position in the market for floating production storage and offloading (FPSO) units. According to InvestingPro data, the company’s stock has delivered an impressive 30% return over the past year, with current market capitalization at $4.3 billion.
The analysts noted that SBM Offshore is well-positioned to benefit from a robust pipeline of new FPSO tenders in the coming quarters. The company is currently experiencing a less cash-intensive cycle, which is expected to reduce net debt in the coming years. With a healthy current ratio of 3.4x and consistent dividend payments for 10 consecutive years, the company demonstrates strong financial stability.
Morgan Stanley pointed out that SBM Offshore’s streams of cash flow from leased units have a secure profile. This stability in cash flow is seen as an attractive feature for investors seeking a reliable investment in the offshore market.
The company’s stock is trading at an estimated 17% free cash flow yield over the next two years. This could potentially lead to increased shareholder distributions, according to the analysts. SBM Offshore is viewed as a compelling investment opportunity for those looking to invest in the offshore sector without the noise of mergers and acquisitions.
In other recent news, SBM Offshore reported a 27% increase in first-quarter revenue, reaching $1,103 million. This growth was driven by a 98% surge in the Turnkey segment, amounting to $627 million, while the Lease & Operate segment saw a 14% decline, bringing in $476 million. Despite the mixed results, SBM Offshore maintained its full-year 2025 revenue guidance of over $4.9 billion. Barclays (LON:BARC) recently downgraded SBM Offshore’s stock rating from Overweight to Equal Weight, setting a new price target of EUR25.00. The downgrade follows SBM Offshore’s notable stock performance, which has outpaced the market by approximately 50% since early 2024. Barclays analyst Mick Pickup noted that new contract awards would be necessary for SBM Offshore to achieve the price target. Investors are keenly observing the company’s progress, particularly with new Floating Production Storage and Offloading units expected to contribute in the second half of the year. SBM Offshore has also initiated a €141 million share buyback program and reaffirmed its cash returns guidance.
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