A slate of offshore drilling stocks were upgraded to Market Perform from Underperform Tuesday by BMO Capital, citing an improving balance of risks versus rewards.
BMO's Alan Laws said in a note that the "potential for a surprise demand uptick now outweighs already price-in risks of further weakening."
Alan Laws.
Laws said as the sector improves, companies will be increasingly differentiated as opposed to being viewed as a single group.
Among the batch, Laws prefers Atwood Oceanics ATW and Ensco ESV.
" While other subsectors in Oil Services remain more attractive today, we believe value and contrarian investors should start kicking tires," Laws said.
Ensco traded recently at $54.70, up 1.15 percent,: Atwood gained 2.15 percent to $50.93
Others also upgraded to Market Perform, from Underperform were Transocean RIG up 0.74 percent to $43.70; Seadrill SDRL up 0.5 percent to $38.45; Diamond Offshore DO up 1.6 percent to $49.33 and Noble,Rowan RDC up 1.1 percent at $31.74.
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