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Lowering TechnipFMC FVE to $14; Shares Still Attractive Due to Expected Deepwater Project Investment

Analyst Note

| Katherine Olexa |

After taking a fresh look at TechnipFMC, we are lowering our fair value estimate to $14 from $24. We maintain our no-moat rating and stable moat trend. Two main factors drive the cut: a reduced midcycle operating margin stemming from the spin-off of Technip Energies and lower growth expectations owing to a reduced level of expected offshore activity compared with previous industry estimates. Technip Energies, spun off in the beginning of the year, was TechnipFMC’s most profitable segment since 2017, averaging 12% operating margins through 2020 while the firm’s remaining segment margins were negative. Without the benefit of Technip Energies, we’ve reduced our midcycle operating margin by about 100 basis points to 7%, compared with our previous estimate of 8%.

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Company Profile

Business Description

TechnipFMC is the largest provider of integrated deep-water offshore oil and gas development solutions, offering the full spectrum of subsea equipment and subsea engineering and construction services. The company also provides various surface equipment used with onshore oil and gas wells. TechnipFMC originated with the 2017 merger of predecessor companies Technip and FMC Technologies.

One St. Paul’s Churchyard
London, EC4M 8AP, United Kingdom
T +44 2034293950
Sector Energy
Industry Oil & Gas Equipment & Services
Most Recent Earnings Sep 30, 2021
Fiscal Year End Dec 31, 2019
Stock Type
Employees 37,966