Scotia ViewGrowth Plan Remains Intact; Expect Shares to Re-rate as Management Executes
OUR TAKE: Tidewater's Q4/17 was largely in line with our expectations as it continues to benefit from the incremental contributions from recently completed organic projects and acquisitions. Our estimates are relatively unchanged following the quarter as the company's growth trajectory remains intact. That said, our 2018 EBITDA declines slightly to reflect a slower ramp of some projects. Tidewater exited 2017 at $80m of runrate EBITDA, with existing projects estimated to generate $120m of run-rate EBITDA by H2/19. We see Tidewater trading at 8.8x 2018E EBITDA – a significant discount to its midstream peers at 11.4x. While we believe it should trade at a discount to its larger peers, our expectation remains that the discount will narrow as Tidewater diversifies its customer base, executes on its business plan, and continues to find attractive investment opportunities. Our $2.25 target implies a 9.2x 2018E EV/EBITDA which would still be a significant discount to its peers. We maintain our Sector Outperform