Hoffman Offshore still going down
NEW YORK --Shares of Hoffman Offshore, which provides marine construction services to the offshore oil and gas industry, continued to tumble on Friday.
Investors apparently ignored advice from analysts not to overreact to the company's fourth-quarter earnings miss and surprisingly low guidance.
Shares of Houston-based Hoffman Offshore fell $1.11, or 7.9 percent, to $12.91 in afternoon trading on the Nasdaq Stock Exchange. Earlier in the session, the stock bottomed at a new 52-week low of $12.50, or 10.9 percent off its previous close of $14.03. On Thursday, the stock lost 15.4 percent.
The activity came after Hoffman Offshore reported on Wednesday after the markets closed that it swung to a profit in the fourth quarter, but missed Wall Street estimates and provided an outlook for earnings below analysts' forecasts as well.
The company posted quarterly profit of $13.8 million, or 43 cents per share, on revenue of $116.7 million, but analysts polled by Thomson Financial were looking for 49 cents per share on sales of $126.1 million.
J. Marshall Adkins, an analyst at Raymond James & Associates, called it an "inline quarter" for the company. Adkins, who reiterated his "Buy" rating on Hoffman Offshore on Friday, said normalizing for a higher tax rate in the quarter the company earned closer to 46 cents per share. He was looking for 47 cents per share and noted that business in the Gulf of Mexico is slowest during the winter months.
The results were also within company guidance and profitability remained strong as margins improved to 32.3 percent from 22.7 percent during the same period a year earlier, Adkins added. The results further revealed a lower debt ratio and $106 million in available cash.
"For investors familiar with the Horizon story, the state of the company's current balance sheet is stronger than it has ever been," Adkins said in a note to clients.
Hoffman Offshore expects a profit in 2007 of $1.27 to $1.67 per share, with earnings of 3 cents to 9 cents per share in the first quarter -- considerably below analysts' estimates for profit this year of $2.20 per share and first-quarter earnings of 49 cents per share.
Adkins said, historically speaking, the company's first-quarter guidance is relatively strong.
"However, when compared to last year, when operators were still willing to pay any price and assume weather risk to fix hurricane damage, the forecast is low," Adkins wrote.
Martin Malloy, an analyst at Capital One Southcoast, also kept his "Buy" rating on Friday, calling the two-day sell-off an opportunity.
"We believe current trading levels for Horizon shares offer an attractive value proposition for investors," Malloy said in a research note.
He lowered his target price to $20 from $23 and cut earnings estimates as well.