- Shares of Nabors Industries Ltd. (NYSE: NBR) have declined 37.47 percent year to date, almost touching their 52 week low on December 14 at $8.63.
- Argus’ Bill Selesky has downgraded the rating on the company from Buy to Hold.
- Selesky believes that the company would take longer to recover that earlier expected, with a more gradual recovery rather than a significant one, which would prolong subpar revenue and profit performance.
According to the Argus report, “Nabors Industries reported a 3Q15 net loss from continuing operations of $250.9 million or $0.86 per diluted share, compared to a net profit from continuing operations of $102.4 million or $0.34 per diluted share in the same period last year.”
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Analyst Bill Selesky explained that the earnings decline was primarily driven by lower drilling rig activity, along with pricing pressure in Nabors Industries’ largest segment, the Lower 48.
During 3Q15, the company had an average of 272 rigs operating, as compared to 380 a year ago. “We do not expect much positive movement in rig utilization rates for the rest of 2015 and into 2016. We have become more concerned that the recovery will take longer to develop,” Selesky stated.
However, Selesky mentioned that the stock valuation already discounts for such a negative impact, while applauding Nabors Industries’ success in cutting costs and raising additional liquidity via the recent sale of part of its stake in the Completion and Production Services businesses.
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