Ensco PLC: Valuation And Financial Strength Make It A Compelling Buy
Tim Travis • 39 Comments
Tim Travis • 39 Comments
Yesterday, 9:24 AM
Yesterday, 8:30 AM
- Ensco (NYSE:ESV) -7.6% premarket after pricing an upsized private placement of $750M of exchangeable senior notes due 2024, with an option to purchase up to an additional $112.5M aggregate principal amount of notes.
- ESV plans to use the proceeds to fund the cash portion of its concurrent exchange offers for outstanding senior notes.
Tue, Dec. 6, 5:36 PM
Fri, Dec. 2, 2:32 PM
- JPMorgan is out with its top stock picks for 2017, but as Jack Hough of Barron's points out, the "shorts" list is far more interesting because Sell recommendations from the sell-side are so much rarer than Buys.
- Of the 14-name shorts list, nine have price targets 10% or more below the current level.
- GE has 10% potential downside thanks to its too-rich valuation relative to free cash flow versus peers.
- Federated Investors (NYSE:FII) could fall 14% thanks to its exposure to the struggling active-management industry.
- Trucker C.H. Robinson Worldwide (NASDAQ:CHRW) has 16% downside as favorable contracts reset to depressed industry levels.
- Archer Daniels Midland (NYSE:ADM) has a price target 18% below the current value as a strong dollar and trade troubles with Mexico crimp profits.
- A 45% price decline could be in store for driller Forum Energy Technologies (NYSE:FET), with good assets and a healthy balance sheet, but way too fancy of a valuation.
- There's also Intelsat (NYSE:I), which JPMorgan says could be a zero as new competition squeezes the heavily leveraged company.
- Other shorts: Cornerstone OnDemand (NASDAQ:CSOD), Ensco (NYSE:ESV).
Thu, Dec. 1, 10:21 AM
- The price of oil pushed through $50 per barrel today, and is currently posting a 2.9% advance on the session at $50.91.
- The S&P 500 is flat and Nasdaq is down 0.45%, but the XLE has tacked on another 1.8% to yesterday's big rise.
- Mid-cap movers: Enerplus (ERF +8.2%), Southwestern Energy (SWN +7.9%), Range Resources (RRC +5.3%), Weatherford (WFT +7.1%), Ensco (ESV +8.2%), Crescent Point (CPG +6.3%).
- Among the large players: Exxon (XOM +1.1%), Chevron (CVX +2%), Shell (RDS.A +2.2%), (RDS.B +2.3%), BP (BP +2.4%), ConocoPhillips (COP +2%), Marathon (MRO +3.1%), Halliburton (HAL +2.3%)
Wed, Nov. 30, 2:30 PM
- Oil and gas names continue to surge following the news that OPEC will cut production.
- Among the 36 energy stocks in the benchmark SPDR Energy ETF, 13 are up by at least 10%: MRO +21.6%, RIG +19.6%, MUR +15.7%, DVN +15.2%, NFX +15.2%, HES +14.8%, APC +13.6%, HAL +13.6%, CXO +11.3%, XEC +10.9%, EOG +10.5%, COP +10.4%, CHK +10%.
- Continental Resources (CLR +23.6%) soars to a 52-week high, making founder and CEO Harold Hamm, already the wealthiest U.S. energy billionaire, another $3B richer.
- Offshore drillers are broadly sporting double-digit gains: ESV +24.8%, ATW +20.6%, RIGP +18.7%, SDRL +16.5%, DO +15.7%, RDC +15%.
- "For all E&P stocks, this is a bullish call for sure, because price is directly correlated with cash flow," says Luana Siegfried, energy equity research associate at Raymond James, which sees U.S. crude reaching $60/bbl by year-end.
- MarketWatch's Philip van Doorn writes that pending earnings estimate increases from analysts ought to set a floor under the energy sector and support even higher prices for oil stocks.
Wed, Nov. 30, 9:23 AM
- Gainers: SCON +71%. CRC +32%. ORIG +16%. DNR +16%. GST +16%. OAS +17%. LEI +16%. WTI +14%. SM +13%. AREX +13%. SN +13%. CPE +13%. SDRL +13%. CIE +13%. HHS +13%. SGY +13%. LPI +12%. SYRG +12%. WLL +11%. ATW +11%. GTE +11%. CLR +11%. WPX +11%. ESV +11%. NE +10%. CRZO +10%. DO +10%. NBR +10%. BTE +10%. MRO +10%.
- Losers: ARWR -61%. CERC -47%. CMRE -14%. AEO -10%. GLBS -9%.
Tue, Nov. 8, 1:44 PM
Wed, Oct. 26, 10:38 PM
Tue, Oct. 25, 5:35 PM
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Mon, Oct. 17, 1:19 PM
- Atwood Oceanics (ATW +2.4%) is downgraded to Underperform from Market Perform with a $7 price target, down from $8, at BMO Capital, whose stress test analysis suggests that the company is most at risk of needing high cost capital or even equity.
- BMO sees risk of ATW running out of liquidity by Q2 2018 unless it is able to defer $400M of payments related to two uncontracted ultra-deepwater rigs, but even if ATW is able to defer payments, there is risk of running out of liquidity in Q2 209, which also is when its credit facility expires.
- The firm says there are 32 idle UDW floaters, and ATW is highly unlikely to be able to secure a cash flow positive contract on one of its two undelivered new builds, which is what it likely needs to secure additional financing.
- BMO believes there are better options to gain exposure to a potential recovery in offshore drilling, notably Ensco (ESV +0.7%), which the firm upgrades to Market Perform from Underperform and moves to the top of its list for investors that want long exposure to offshore drillers.
Fri, Oct. 14, 3:18 PM
- Ensco’s (ESV -0.9%) fleet status update yesterday illustrates the ultra-deepwater rig market remain woefully oversupplied, Tudor Pickering says as it maintains its Hold rating on the shares.
- ESV extended contracts with Saudi Aramco for two jack-up rigs, with one signed on for an additional three years but settling for a lower dayrate in the mid-60s the new contract begins in December, and another coming out of stacking to start a new five-year contract at a dayrate in the low 70s.
- However, ESV said two of its uncontracted sixth generation rigs in the Gulf of Mexico were preservation stacked, a decision Tudor says is not surprising.
Wed, Sep. 21, 3:55 PM
- Ensco (ESV +6.8%) is upgraded to Buy from Neutral with a $10.50 target price at Goldman Sachs, which says the stock offers an option to investors to participate in upside from a potential sharp rebound in oil prices without taking too much downside risk.
- While offshore drillers face industry headwinds, Goldman believes ESV's balance sheet strength and liquidity allow it to remain relatively better positioned than peers, offering attractive stock upside due to its YTD underperformance.
- ESV also offers exposure to the jack-up market, which the firm sees more positively than the floater market in the near term; limited jack-up exposure was among the reasons Goldman downgraded Diamond Offshore.
Tue, Sep. 20, 3:45 PM
- Diamond Offshore (DO +2.4%) is upgraded to Buy from Hold at Evercore ISI, which believes the unwinding of shorts as oil prices firm and an offshore rig market bottom materializes over the next 6-12 months could be a catalyst for offshore drillers.
- The firm notes the recent news that the Rowan Reliance drilling contract may be terminated early - the news was expected but was surprised that the company said an exclusive five-year service agreement could be in lieu of a contract termination; it sees the modified blend-and-extend agreement suggests the operator could see a potential offshore rig market bottoming by March 31 and tightening within the next 12 months.
- Evercore continues to rate Ensco (ESV -1.4%), Rowan ([[RDC] -0.5%) and Noble Corp. (NE -2%) as Buys, "as this select group of offshore drillers will be survivors of the current multi-year cyclical downturn."
Thu, Aug. 25, 12:27 PM
- Transocean (RIG +1.4%) is upgraded to Neutral from Sell with an $11 price target at Citigroup, which says RIG has exceeded expectations for cost reductions while the backlog remains superior to peers.
- Citi says that while RIG's EBITDA should steadily decline, the company does not face an EBITDA cliff unlike some peers, and the company also was able to issue debt which has lowered bond yields.
- Among offshore drillers, Citi rates Ensco (ESV +0.1%), Diamond Offshore Drilling (DO +0.1%), Noble Corp. (NE -0.6%), Atwood Oceanics (ATW -1.4%), Rowan (RDC -0.6%) and RIG at Neutral, while Pacific Drilling (PACD -2.7%) remains rated a Sell.
Tue, Aug. 23, 12:58 PM