Market Overview

Credit Suisse Notes Top Picks and Misses for Offshore Drillers

Related ATW
Earnings Scheduled For November 10, 2014
RS Platou Downgrades Atwood Oceanics To Neutral
Related NE
Earnings Scheduled For October 29, 2014
Noble Corporation plc To Pursue Development Of MLP
Energy Stocks Move Higher as Oil Spikes (Fox Business)

In a report published Friday, Credit Suisse analyst Gregory Lewis reviewed the “Beaten, Battered and Bruised” offshore drillers.

Lewis noted that offshore drillers are underperforming the OSX in 2014 by approximately 3% year-to-date, after a disappointing 2013, where the sector underperformed by approximately 15%.

Credit Suisse downgraded Atwood Oceanics(NYSE: ATW) from Outperform to Neutral due to a limited upside compares with other drillers in the sector. Lewis sees the most value on Noble (NYSE: NE) and Rowan Companies (NYSE: RDC) which have an approximate 20% and 40% upside, respectively. Both companies are “cheap” on Credit Suisse's NAV and DCF analysis, especially compared with SeaDrill Limited (NYSE: SDRL) and Atwood Oceanics. SeaDrill and Atwood “are playing a different game - paying out all of their cash flow as a dividend and shifting assets to SDLP (financial arbitrage).”

The analyst commented, “We expect lower gen floater dayrates to continue to sink in 2014, with new/next gen dayrates flattish. Bottom line – lower dayrates and slowing offshore CAPEX has put the drillers in the penalty box. Under this backdrop stock selection matters and we like NE (De-Risked NAV $32) and RDC (premium fleet trading at a discount).”

Latest Ratings for ATW

DateFirmActionFromTo
Nov 2014Credit SuisseMaintainsNeutral
Nov 2014Credit SuisseMaintainsNeutral
Sep 2014RS PlatouDowngradesBuyNeutral

View More Analyst Ratings for ATW
View the Latest Analyst Ratings

Posted-In: Credit Suisse Gregory LewisAnalyst Color News Downgrades Analyst Ratings

 

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