U.S. offshore drillers downgraded at BMO

|By:, SA News Editor

BMO Capital downgrades the U.S. offshore drilling group to Underperform from Market Perform, expecting industry earnings to continue to slide due to lack of catalysts.

The firm upgrades Baker Hughes (BHI +1.8%) to Outperform and hikes its price target to $65 from $51, believing BHI's North American assumptions are too low given increased fund flows to the OFS sub-segment; Weatherford (WFT +1.7%) also was upgraded.

Among several downgrades, the firm cuts Diamond Offshore (DO +0.3%) to Underperform and cuts its price target to $64 from $70, seeing further earnings pressure in Brazil; also lowered were Atwood Oceanics (ATW -3.6%), Ensco (ESV +0.1%), Noble Corp. (NE +0.4%), Seadrill (SDRL -0.2%), Transocean (RIG +0.2%) and Rowan (RDC +0.5%).