Sept. 26 (Bloomberg) — Prosafe SE, a supplier of floating accommodation units for the offshore oil and gas industry, rose the most on the Oslo stock exchange’s OBX index as Fondsfinans ASA advised investors to buy the stock before a recovery.
The Larnaca, Cyprus-based company rose by as much as 2.4 percent, and traded 2.1 percent higher at 49.58 kroner by 11:50 a.m. in the Norwegian capital. About 295,000 shares were traded today, 28 percent more than the three-month daily average.
“We expect a rebound in Prosafe shares following the near 20 percent slump since last month’s high,” Fondsfinans analyst Petter Narvestad said today by e-mail. The Relative Strength Index, a technical measure of market momentum, is at 27, the 13th day below the 30 level that suggests to some analysts that a security has been oversold and is poised to increase.
Fondsfinans raised its rating to buy from neutral and cut its price estimate to 57 kroner from 60. The stock is rated a buy by five of 16 analysts that share ratings with Bloomberg.
“We expect newsflow to turn positive, with three Mexico rigs due for renewals/extensions in the fourth quarter and additional work likely to be booked,” Narvestad said.
Prosafe, owner of 11 semi-submersible accommodation rigs and with two on order, is betting on demand for the floating hotels it operates as energy companies expand exploration for hydrocarbons offshore. The company has lost about a fifth of its value since its stock price climbed to 61.70 kroner on Aug. 8, the highest intraday level in more than five years.
“The drop was triggered by competitors ordering additional capacity and concerns the Mexico-position may be eroded by new market players,” Narvestad wrote. While Fondsfinans shares these concerns, the broker sees the magnitude of the decline “as a clear overreaction,” the analyst wrote.
– Alastair Reed and Stephen Treloar, Copyright 2013 Bloomberg.
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