Credit Suisse Notes Top Picks and Misses for Offshore Drillers

Loading...
Loading...
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, Inc.
ATW
from Outperform to Neutral due to a limited upside compares with other drillers in the sector. Lewis sees the most value on Noble Corp.
NE
and Rowan Companies plc.
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
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).”
date
ticker
name
Price Target
Upside/Downside
Recommendation
Firm
Posted In: Analyst ColorNewsDowngradesAnalyst RatingsCredit SuisseGregory Lewis
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!

Loading...