McDermott International Inc. buy Riccardo

Shares of McDermott International Inc. fell sharply on Tuesday after the Houston-based energy services company predicted first-quarter profit below analyst estimates. Late Monday, McDermott estimated profit between 50 cents and 54 cents per share for the quarter ended March 31. Analysts polled by Thomson Financial expect a profit of 69 cents per share. McDermott shares lost $4.97, or 8.3 percent, to close at $54.83 Tuesday. The stock has ranged from $26.49 to $63.01 over the past year. Wachovia Capital Markets analyst Brad Handler said a sell-off based on the lower estimates -- which McDermott attributed to harsh weather disrupting its offshore oil and gas construction activities -- "makes sense." In a note to investors, Handler cut his 2008 profit outlook on McDermott to $2.95 per share from $3.05, but maintained his "Outperform" rating. "We are buyers of this stock after (the) expected pull back," he said. Separately, Jefferies analyst Stephen Gengaro reduced his estimates, but said McDermott's "future remains bright," as its work backlog is at record levels and several of the company's other segments are poised to report strong earnings. Gengaro left his "Buy" rating and $72 price target unchanged. Shares of McDermott have more than doubled from a 52-week low of $26.49 set last May. The company is scheduled to report first-quarter earnings on May 12.