A third quarter release from Gulf Marine Services (GMS) could be read as a mild profit warning despite guidance that the full year will be 'broadly' in line with expectations.

The shares fall 9.7% to 99.3p as the self-propelled self elevating support vessels (SESV) provider warns of a $8 million hit from dollar strength and says low oil prices have had some effect on contract pricing.

GMS chart

Barclays cuts its 2015 earnings per share (EPS) forecast from 26 cents to 24 cents, its 2016 estimate from 39 cents to 30 cents and 2017 EPS from 43 cents to 36 cents. The investment bank stays at overweight but trims its price target from 220p to 200p.

Its continued confidence in the company – whose merits we discussed in a recent sector report - reflects some of the positives in the statement. Utilisation stands at 98%, the group has a secured order book of $615.9 million a new yard in Abu Dhabi will increase efficiency and allow it to carry out more fabrication work and its new build programme remains on track.

Barclays comments: 'While the growth story of this name is particularly interesting, we believe it comes at a reasonable price, with shares trading on only 6x 2016F, vs the sector on 13x. Part of this may be due to market sentiment, but we feel given the earnings visibility and potential for increased shareholder returns, it offers good relative value for investors.'

Issue Date: 11 Nov 2015