17 January 2007

TDW: Comments on Brokerage Downgrade

We previously reported the very positive results of an analysis of Tidewater's financial data through the third quarter of calendar year 2006.

It was, therefore, painful when the influential Goldman Sachs firm initiated coverage of TDW on 11 January 2007 with a rare "Sell" recommendation. The stock price dropped that day from $46.50 to $43.78.

We spent the next few days licking our wounds and wondering where we went wrong. Perhaps, it is foolhardy to apply our analysis methodology using historic data when the performance of the subject company is driven by one parameter: the current price of oil. This might be true, but we felt redeemed when Tidewater issued a press release on 16 January announcing that earnings in the quarter ending 31 December 2006 would substantially exceed Wall Street expectations.

By the close of today's trading, the stock price stood at $47.58.

Goldman probably had great reasons for their recommendation, and the recent bounce back might be short lived. Time will tell. In any event, we make investment choices based on quantitative analyses using proven data.

1 comment:

  1. For fun, I checked barchart.com:


    to see what the popular, purely technical indicators were showing. They are totally conflicted, with lots of buys and sells, not to mention a hold or two.