McDermott International (MDR) Gaps Higher

McDermott International (NYSE: MDR) spiked 8.63% on Friday on the news that it was chosen by Saudi Aramco to carry out the phase two upgrade of the giant offshore Safaniyah oil field. The stock gapped higher as it opened the session with an increase of 3.31%, which is a move from $12.40 to $12.81. It closed the day at $13.47.

McDermott International (NYSE: MDR) had a big run in a period from November 16th to January 28th as the price jumped 30.72% from $9.83 to $12.85. From $12.85 it fell to $11.96 on February 4th. So today, MDR jumped above the resistance of $12.85 and the volume was 3.4 times higher than its average volume. It is also important to say that MDR closed today near a turning point from September 14th. On that day McDermott International (MDR) reached a high of $13.56 and reversed to the price from November 16th.

Analysts estimated a decline in revenue of 13.81% for the company and the new contract will definitely help MDR to beat current earnings and revenue estimates. Current mean target price is $14.94 and it should also be increased for the effects of the new contract. It is always psychologically hard to buy a stock after a huge single day increase in price, but a possible strategy would be to jump in with a large stop loss limit, if a certain pull back happens. The other possibility would be to place a limit order at $13.14 which is a mid point of today's open and high and it could be a support.

Disclaimer: I don't have a position in MDR. The material on this website is not an investment advice. I do not provide investment advices. Before investing you should consider risks.