SBM Offshore rises 4.5 percent to be the top gainer in the STOXX Europe 600 Oil and Gas index after Barclays upgrades the Dutch maritime engineering group to "overweight" and on positive news about a troubled Norwegian project.
Barclays upgrades the stock from "underweight" saying the market has taken too negative a view on the company.
Even if SBM Offshore was to raise $900 million in a share issue to cope with possible writedowns on its Norwegian platform Yme, Barclays analysts write that they put the price target at 12.30 euros per share, leaving 51 percent upside for the stock.
Problems at the Yme project, developed for oil firms Talisman Energy and Lotos, may not be as bad as originally estimated, KBC Securities analyst Michael Roeg says in a note, citing the Norwegian regulator PSA.
The current share price indicates a rights issue is needed to cope with the financial burden of completing the Yme project but SBM Offshore has already raised cash by selling assets, and spent relatively little on investments, Roeg says.
"The balance sheet has remained stronger than initially expected," he says.
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