Raymond James stays bearish on drillers but upgrades Rowan

Raymond James maintains its bearish stance on offshore drillers and cuts its estimated 2015 sector EPS by ~18% while noting that this a typical cyclical slowdown and not permanent.

The firm estimates the industry needs to cold stack ~6% of both the floater and jackup fleet over the next three years to maintain 90% utilization; assuming the pace of newbuilds slows, this should improve the supply/demand dynamics by 2017.

Rowan Cos. (RDC +0.2%) earns an upgrade to Outperform, joining Pacific Drilling (PACD -1.9%) and Ocean Rig UDW (ORIG -2.1%) as drillers who would rank atop the list of any would-be acquirer given the high spec nature of the fleets.

Atwood Oceanics (ATW -4.1%), Ensco (ESV -2.4%) and Noble Corp. (NE -0.3%) are downgraded to Market Perform, as offshore stocks are in “full-blown meltdown mode."

The firm maintains Transocean (RIG -1.9%), Diamond Offshore (DO -1.6%) and Hercules Offshore (HERO +0.4%) at Market Perform, noting that “lower quality assets are too risky as we head into a sloppy market."

Comments (2)
  • unclemike7849
    , contributor
    Comments (369) | Send Message
    "As offshore stocks are in full blown melt down mode"


    Do any of these analysts keep up with their "appointed sectors"? Do they at least do a little homework before making such ridiculous claims? No wonder their advice is often ignored by the investing public. The offshore market is doing very well and that doesn't even count Mexico's contribution by 2015.
    3 Feb 2014, 04:16 PM Reply Like
  • goolneb
    , contributor
    Comments (185) | Send Message
    I pay little attention to market analyst when the they are negative and the shares drop I am looking to accumulate and most analyst are copping others I have done well by buying and holding long term even in 2008--2009 and made good money banks pipe lines RR oil and gas GE medical co. and if I listen to them I am either late or early the big boys are already in or out
    3 Feb 2014, 05:13 PM Reply Like
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