Market Overview

Ocean Rig Nears Penny Stock Status

Ocean Rig Nears Penny Stock Status

Ocean Rig UDW Inc (NASDAQ: ORIG) stock is down 19.4 percent on Wednesday after reporting disappointing Q4 earnings, sending the stock closer to sub-$1 territory. The company commentary didn’t particularly inspire confidence for investors either. Management said that “prospects for the industry remain bleak” and “are likely to remain so at least until 2018.”

Although Ocean Rig’s comments were more bearish than the outlook described by other offshore drillers, the company’s earnings have impacted other names in the space as well. DryShips Inc. (NASDAQ: DRYS), which crossed into penny stock territory long ago, is also down around 19 percent in Wednesday’s session. DryShips holds a large stake in Ocean Rig.

Earlier this week, Barclays analyst David Anderson said that he sees little hope of any positive developments for offshore drillers anytime soon.

“It’s a game of survival in Offshore Drilling and we can’t see the downward trajectory of offshore upstream spending improving over the next two years, even if oil moves back above $50/bbl by year-end,” he wrote.

Related Link: Offshore Drillers In 'Game Of Survival'

Transocean LTD (NYSE: RIG), Diamond Offshore Drilling Inc (NYSE: DO) and Noble Corporation Ordinary Shares (UK) (NYSE: NE), the three names in which Barclays sees the most downside, are all down between 2.5 and 5.0 percent following Ocean Rig’s earnings.

Disclosure: the author holds no position in the stocks mentioned.

Latest Ratings for ORIG

Mar 2018Initiates Coverage OnHold
Dec 2017Initiates Coverage OnOutperform
Aug 2016TerminatesUnderweight

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