A Ray of Sunshine for McDermott?

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After a rough couple of days for investors in McDermott International Inc. (NYSE: MDR), a ray of sunshine Thursday following the announcement that the engineering and construction specialist for the oil industry won a large contract in the Arabian Gulf. Shares were up about 7% to $7.89 shortly before noon.

The contract calls for the engineering, fabrication, transportation and installation of four new offshore topsides facilities, as well as modification of two existing production facilities. Operations are expected to commence in the fourth quarter of 2014, with project completion planned for the first quarter of 2015.

Some good news was needed after the stock fell more than 9% this week after the report that after fourth-quarter and full-year net income and revenue fell well short consensus estimates, and the company also withdrew its previous guidance.

The company’s CEO said following the report:

[W]e are addressing some of the deepest challenges our company has seen in years. We are learning and growing from those challenges and restructuring both financially and operationally to ensure that we have the resources and the dynamic and accountable organization to achieve long-term success to best meet our customers’ needs.

The trouble is that the company has been seen as a low-quality operator that regularly underperforms expectations and faces cost overruns. The fact that management withdrew the forward guidance and has suspended the practice of offering guidance was taken as a sign of serious problems. That, along with the huge decline in revenue and operational problems, means the company still has a long slog ahead if it is to turn itself around.

The share price is down more than 17% year to date, and more than 31% from a year ago. It has traded in a range of $6.68 to $11.38 over the past year. Short interest is more than 15% of the float, it highest level in the past year.