Following a downgrade at Morgan Stanley from Overweight to Underweight and $9 reduction in price target from $59 to $50, shares of Tidewater (NYSE: TDW) have fallen about one percent in Monday's pre-market.
Morgan Stanley analyst Ole Slorer assumed coverage of Tidewater in Monday's note. Slorer noted the downgrade comes amid notions that demand for the global OSV fleet in 2015 will be in the low single-digits, while supply growth will be in the mid-teens.
Based on beliefs that Tidewater will face headwinds in the near-term, Slorer has lowered his utilization assumption for towing supply vessels and other non-deepwater vessels by five percent each. This has resulted in EPS estimates for fiscal 2015 and 2016 that are "meaningfully" below consensus at $3.98 and $3.61, respectively.
Looking ahead, Slorer wrote, "While more vulnerable to a near-term slump, we do see significant upside into what should be a vibrant 2016/17 recovery."
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