Acergy S.A. (ACGY) second-quarter results, despite marginally missing estimates, reflected good project execution skills and solid activity levels. With a healthy backlog, significant cash balances and no near-term refinancing requirements, Acergy should weather the challenging business environment better than many of its peers.
Our continued Outperform recommendation on Acergy ADRs also reflects the company’s high-quality client base, which mostly includes well-capitalized oil majors or national oil companies. We believe Acergy’s impending merger with Subsea 7 will create a stronger, more diverse seabed-to-surface engineering and construction player, enabling it to provide a broader array of services.
As such, we view Acergy ADRs as an attractive investment and maintain its Outperform recommendation. Our $21 price objective represents a 2010 P/E multiple of 23.1X.