Hold your horses: Why Vard’s new contracts aren’t as exciting as they seem

Big near-term earnings aren’t in the horizon.

Vard Holdings has closed four contracts just in the past week. These include two vessels for the Nordic American Offshore and an offshore construction and anchor handling vessel for Rem Offshore, among others. 

These contracts are worth a total of $1.1b, or 8.4b Norwegian Krones.

While this may be exciting news, research firm OSK DMG has cautioned against too much optimism.

“While the order pace is strong, we caution investors that ordering tends to be lumpy and that near-term earnings are not expected to outperform. With the higher visibility of earnings, we raise our TP to SGD1.10 (from SGD1.00) but maintain our neutral call,” noted a report from OSK DMG.

The report further stated, “We caution that 2Q14 earnings may disappoint the raised expectations implicit in Vard’s higher share price, which has recovered 40% from the trough.”