Vard

Vard: Vard secured a contract for the design and construction of one offshore subsea construction vessel for Farstad Shipping, with delivery scheduled from Vard Vung Tau (Vietnam) in 4Q16. Overall, the street is concerned on the headwinds against the counter. Following Vard's dismal 3Q14 results (11 Nov), we note that five out of 15 analysts cut its earnings estimate for FY14 and FY15 by up to 47% and 57%, respectively. To sum up, key risks that may continue to keep an overhang on Vard’s share price include: - String of project cost overruns in Brazil and Europe; - Depleting order book and weak order outlook; - Brazil tax claim overhang. While the new contract adds to Vard’s order book, management guided for below-average new orders in 2015, given the declining oil price and expectations of lower E&P spending by oil majors. At $0.60, Vard trades at a hefty 13.4x forward P/E and 1x P/B amidst the headwinds. Bloomberg consensus has 1 Buy, 8 Holds and 7 Sells on the counter with a 12-month average TP of $0.62.