Prosafe SE dropped the most in seven months in Oslo after DNB ASA advised investors to sell shares in the supplier of floating hotels for offshore oil workers because of a risk that lower earnings will lead to a reduced dividend.
The Larnaca, Cyprus-based company declined 4.8 percent, the most since Aug. 23, to 53.50 kroner by 12:22 p.m. in the Norwegian capital. That makes it the biggest loser today on the Oslo stock exchange’s OBX index of 25 most-traded stocks.
“Prosafe is a high-quality company, but the valuation is demanding post strong share price performance,” Mats Olimb, an analyst at DNB, said today in a note. The bank’s estimate of the company’s earnings per share for this year is 17 percent below consensus and DNB expects profit and dividends to weaken.
Prosafe, which owns 11 semi-submersible accommodation rigs and has two on order, is betting on rising demand for the vessels as energy companies expand exploration for hydrocarbons offshore. Its shares climbed 18 percent in the past year, boosted by contracts from companies including Talisman Sinopec Energy U.K. Ltd. and Det Norske Oljeselskap ASA.
DNB cut its recommendation to sell from hold and maintained its 54 kroner price estimate. “There are better alternatives for investors looking for attractive yields,” including Fred Olsen Energy ASA and Seadrill Ltd. that offer dividend yields of 8 percent and 9.8 percent, respectively, and “better earnings visibility,” the Oslo-based bank said.
Prosafe will probably pay out $0.60 in 2013, $0.72 in 2014, and $0.91 in 2015, according to Bloomberg dividend forecasts.
The company on March 15 sold 13 million new shares at 58 kroner each, raising 754 million kroner ($131 million). Proceeds will be used to fund “value enhancing growth investments,” the company said at the time. “The prospects and fundamentals of the accommodation market remain attractive,” it said.