- Pacific Drilling (PACD -9.6%) gives up a chunk of yesterday's 28% gain as Deutsche Bank downgrades shares to Hold from Buy with a $6 price target, cut from $10.
- Despite strong cost control efforts, the firm says PACD faces increased risk of a restructuring due to looming debt maturities and weak contract coverage with only one rig fixed past April 2017.
- "Although some meaningful equity value may remain, it is difficult to quantify at this point which seems likely to serve as an overhang on the shares until a new capital structure is finalized," Deutsche Bank writes.
- However, the firm expresses confidence in PACD's long-term fundamentals because of the type of assets of the company's fleet and potential recovery in the deepwater demand.