Analysts: At least it's not getting worse at Transocean

Offshore drillers continue to show some resilience after Transocean (RIG +1.6%) reported solid Q2 earnings, but analysts suggest it's too early for investors to jump in.

Jefferies analysts still see challenges, in particular for RIG's 5th G fleet as rigs scramble down market/incur idle time; also, the potential for prolonged weakness in the North Sea leads the firm to lower estimates for FY 2016 even as it is "modestly more comfortable" that a broader 2016 recovery could still be in play.

UBS thinks RIG will have to make the decision to either reduce the dividend or increase its debt by 2015; dayrate already are down 25%-40% from peaks levels, and pressure likely will continue given limited rig demand and fierce competition, and regular dropdown proceeds from the MLP probably will not provide quite enough help for RIG's free cash flow.

SDRL +2.7%, NE +2.9%, ATW +2.2%, RDC +2.3%, VTG +1.6%,ESV +0.3%.

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Comments (5)
  • combatcorpsmanVN
    , contributor
    Comments (1393) | Send Message
    $RIG - this is the EXACT time to be going long RIG. What Jefferies sees as 'challenges' and UBS 'thinks' is a euphemism for 'we're going Long and would like to see lower share prices' imo.


    My view is that Wall Street looks to continue pushing shares, that have already fallen significantly, lower in order to go long themselves. I like to add shares in companies that have solid fundamentals rather than listen to speculative conclusions about what might happen sometime in the future. These 'analysts' are really marketing agents for the brokerage firm imo.


    RIG is a solid buy regardless of WS imo.
    8 Aug 2014, 03:56 PM Reply Like
  • chopchop0
    , contributor
    Comments (5342) | Send Message
    Famous last words. The drillers have been perpetually "cheap" for years after the recession popped their bubble.


    Got sick of holding the bag, and profited on RIG two years ago at 55 and haven't looked back. Here we are 2 years later, struggling to even get to 40
    9 Aug 2014, 12:38 AM Reply Like
  • moseslarsen
    , contributor
    Comments (769) | Send Message
    ^ Couldn't agree more, ...VN!


    Went long ESV and added to the position this week. Almost bought RIG today, but will restrain myself.


    Lets make some money, Moses
    8 Aug 2014, 04:31 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (10717) | Send Message
    While the analysts talk about challenges, it has to be noted that the (NYSE:RIG) management team has done a good job to date in riding out the storm. And while there are challenges ahead -


    investors aren't paying a premium here - instead they are getting shares at a deep discount ... and will get paid 7% while they wait....


    the demise of the offshore drilling industry is overstated.


    Long (RIG)
    10 Aug 2014, 09:16 AM Reply Like
  • combatcorpsmanVN
    , contributor
    Comments (1393) | Send Message
    $RIG - the Analysts are hired to do one thing on WS: Attract attention enough to enhance the firm's profitability. If the Firm wants to sell out of inventory, the analysts mission is to 'honk' the shares higher by making up 'a story' that the Retail force can swallow enough to get their book of business moving in that direction. On the other hand, if the Firm wants to accumulate inventory, the analysts mission is to make up 'a story' that the Retail force will swallow to get their book of business dumping shares. In other words, the analysts are catalysts to follow the direction of the Firm's wishes.


    Anyone that actually believes the best research is published to the investing public is also convinced that Elvis will be the grand marshall of the next 4th of July parade in Memphis.


    This is why WS hires 'analysts' when all the B.S. is taken out of the equation. CNBC, Fox, Bloomberg business channels are merely catalysts that piggy back on 'analysts' missives.
    11 Aug 2014, 01:30 PM Reply Like
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