Please ensure Javascript is enabled for purposes of website accessibility

Shares of Helix Energy Solutions Climb 21% After an Analyst Upgrade

By Tyler Crowe - Mar 17, 2016 at 3:53PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Morgan Stanley's analysts gave Helix's shares an outperform rating, but it's the reason why that makes the stock seem compelling.

Image source: Helix Energy Solutions investor presentation.

What: Shares of Helix Energy Solutions (HLX -0.33%) are up 20.9% as of 3:30 p.m. ET today following a recent upgrade from analysts at Morgan Stanley.

So what: Typically, analyst upgrades should be taken with a pretty large grain of salt, and most of the time they are only given token consideration by the market. This particular upgrade, though, may be getting a little more love because Morgan Stanley's analysts gave some color about Helix's business. 

Unlike most oil services companies that focus a large portion of their work on new project development and bringing new oil on line, Helix specializes more on the process of maintaining and repairing existing wells and plugging and abandonment work on exhausted wells. This kind of work is less reliant on the discretionary capital spending of a company and more of a necessity to keep current operations working smoothly. Also, well maintenance can be a "quick hit" kind of investment that producers may be more willing to do rather than take on the expense of developing a new source. 

This kind of business model will be a little more conducive to surviving the market downturn, as we saw when Helix reported better-than-expected earnings last quarter. 

Now what: While Morgan Stanley's analyst report does highlight the company's business model -- something that may be overlooked by Wall Street when it indiscriminately sells off industries -- it doesn't change anything about what has been going on with it. If anything, investors may want to use this as a chance to take a deeper look at it as a potential play on the oil and gas rebound.


Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Helix Energy Solutions Group, Inc. Stock Quote
Helix Energy Solutions Group, Inc.
$3.07 (-0.33%) $0.01

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/25/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.