Canaccord slashes target on Lamprell, reinstates 'buy' rating

Canaccord said the drop to Lamprell's target price reflected a weaker outlook through 2020 but stated it believes that following significant cost reductions implemented by the group in early 2020, the close-out of EA1 and expected close-out on Moray East later this year, the firm will likely have "a stable cash balance through 2020" and may even close the year with an increased net cash position.

The Canadian broker also said it was "increasingly bullish" on the prospect for orders for wind jackets and its assumptions now embed Lamprell building jackets for around 500-megawatt peak per year - rising close to 800 MWp by 2023.

"On top of this is the likely award of some Saudi LTA work which we assume happens next year," added Canaccord. "There is considerable scope for upside above this, into wind substations or further oil and gas work, which we do not factor in."

Canaccord said it recognises that gross margins were "unlikely" to reach previous peaks and now assumes a long-term margin of around 17%.