Canaccord Genuity lowers target price on Lamprell

Analysts at Canaccord Genuity lowered their target price on oil rig construction business Lamprell from 90.0p to 75.0p on Wednesday after the firm announced a $120.0-150.0m capital raise requirement by the end of the third quarter.

Along with its delayed 2020 results, Lamprell's capital raise announcement, of which the company anticipates up to $90.0m to come from new working capital facilities and the remaining $30.0-60.0m from shareholders, reflected the need to complete funding its share of the IMI yard in Saudi, to prepare Hamriyah and elsewhere for the coming boom in demand for offshore wind and to provide adequate bonding capacity for bidding on the large wind contracts the company expects to win.

The German bank said Lamprell quoted "one arresting statistic for this", stating that management estimates a need for 16.0m tons of offshore wind jackets over the next nine years, in its target markets alone, which compares to its own capacity of 100,000 tons per year.

"We see this as a highly attractive opportunity, both in terms of volume of work and likely margin, and this underpins our continued 'buy' rating and new 75.0p (was 90.0p) target, with the cut reflecting the inclusion in our forecasts of an assumption of new shares issued," concluded Berenberg.