Credit Suisse Just Downgraded Transocean, And Shares Are Falling
In a report published Tuesday, Credit Suisse analyst Gregory Lewis downgraded his rating on Transocean LTD (NYSE: RIG) from Neutral to Underperform, but reiterated a $12.00 price target.
In the report, Credit Suisse noted it is "downgrading to Underperform (from Neutral) and maintaining [a] $12 TP.
"Our $12 TP is 6x our 2016 EBITDA estimate," they add. "The down-cycle should be more painful for RIG than most owing to its mix of some new and a lot of old rigs. RIG has ten idle floaters (3 in GoM, 2 in WAFA, 3 in SE Asia, 1 in NSea, 1 in transit) – accounting for 15% of RIG's 2014 revenue."
The firm estimates 54 percent of its 2014 revenue is "at risk" over the next two years, "mainly due to floater contract roll-offs." Credit Suisse expects Transocean to stockpile rigs through 2016.
"Tough times ahead," the analyst concludes.
Transocean closed on Monday at $20.44, up 10 percent. Shares are down more than 3 percent in Tuesday's pre-market trading.
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Latest Ratings for RIG
|Dec 2016||Bernstein||Initiates Coverage On||Outperform|
|Nov 2016||Canaccord Genuity||Upgrades||Hold||Buy|
|Oct 2016||Morgan Stanley||Upgrades||Underweight||Equal-Weight|
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