UPDATE: UBS Downgrades TechnipFMC (FTI) to Neutral
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UBS analyst Amy Wong downgraded TechnipFMC (NYSE: FTI) from Buy to Neutral with a price target of $8.00 (from $9.00).
The analyst comments "After spinning off Technip Energies, TechnipFMC is now predominantly focused on providing equipment and services to the upstream oil and gas industry, with a majority of profits from the subsea sector. We forecast Subsea revenues growing at a 2% CAGR over 2020E-24E, although the recovery is weighted to the back end of this period due to the timing of awards. The spin-off also serves to delever TechnipFMC's balance sheet with proforma net debt-to-EBITDA expected to fall from 3.2x at separation to 2.8x after TechnipFMC sells down $200m of Energies to BPI with further opportunity to reduce debt by selling down its remaining 49.9% of Energies over time and organic free cash generation. With limited upside to our price target and valuation broadly reflecting our views of the sum of the parts of its core operating business and stake in Energies, we downgrade the stock to Neutral."
Shares of TechnipFMC closed at $7.80 yesterday.
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