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On Friday, Raymond (NSE:RYMD) James analyst James Rollyson revised the rating for Helix Energy Solutions Group, Inc. (NYSE:HLX) from Strong Buy to Outperform, concurrently lowering the price target to $10.00 from the previous $14.00. Currently trading at $6.58, InvestingPro analysis suggests the stock is undervalued, despite showing high volatility with a beta of 1.92. The downgrade was a response to a series of factors that prompted a significant reduction in the company’s anticipated North Sea activity for 2025. This downturn led to the warm-stacking of the Seawell vessel and a considerable decrease in the EBITDA forecast for the year.
Despite these challenges, Helix Energy began the year with results that modestly exceeded expectations, bolstered by its Well Intervention segment. The company is still poised to generate robust free cash flow (FCF) under the revised guidance, with plans to allocate a minimum of 25% to share repurchases. Financial data from InvestingPro shows an impressive free cash flow yield of 11% and a healthy current ratio of 2.28, indicating strong liquidity. The company maintains a moderate debt level with a debt-to-equity ratio of 0.42. While these buybacks are expected to be more concentrated in the latter half of the year, in line with FCF timing, they could potentially exceed the set minimum threshold.
Rollyson expressed optimism about the eventual improvement in activity, pointing to current conversations and tendering activities that suggest a rebound in 2026. However, the analyst noted that the recovery would be contingent on macroeconomic factors. In the interim, Helix’s Well Intervention business remains largely contracted, and the company boasts a strong balance sheet, which is forecasted to improve further.
The adjustment in rating to Outperform reflects the anticipated delay in North Sea operations, with no immediate catalysts likely to drive near-term growth. The new 12-month price target of $10 per share takes into account these revised expectations and the current market outlook for Helix Energy Solutions Group. According to InvestingPro, analyst consensus remains strongly bullish with a 1.67 recommendation score, and three analysts have recently revised their earnings estimates upward. For deeper insights into HLX’s valuation and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
In other recent news, Helix Energy Solutions Group Inc . reported its Q1 2025 earnings, revealing an unexpected earnings per share (EPS) of $0.02, which surpassed the forecasted loss of $0.0081. However, the company’s revenue for the quarter was $278 million, falling short of the anticipated $286.37 million. Despite the revenue miss, Helix maintained a strong financial position with cash and equivalents at $370 million and a backlog of approximately $1.4 billion. In terms of future guidance, Helix provided revenue expectations between $1.250 billion and $1.410 billion for the full year 2025, with EBITDA guidance around $275 million.
The company is focusing on cost reduction and operational efficiency amid challenging market conditions. Helix’s CEO, Owen Kratz, expressed confidence in the company’s resilience, emphasizing a significant backlog and a robust balance sheet. Additionally, Helix announced plans to potentially stack the Seawell vessel for all of 2025, with possibilities of repurposing it to another region. Analyst firms such as Raymond James and TD Cowen have shown interest in Helix’s strategic adjustments and market positioning. These developments reflect Helix’s ongoing efforts to navigate a dynamic and uncertain market environment.
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