- Helmerich & Payne (HP -3.2%) is downgraded to Underperform from Market Perform with a $48 price target, lowered from $55, at BMO Capital, citing lower estimates and downside risk.
- Similar to offshore drillers, HP's 2016 earnings are benefiting from contracts signed at the peak of the market, BMO says, estimating that 61% of HP's rigs are contracted at rates 33%-50% above the current spot market in 2016, which would be a material headwind for three years.
- The firm also sees a risk of a dividend reduction at HP due to slightly negative cash flow over the next few quarters.