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What to Expect from Ocean Rig’s 3Q15 Earnings

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Oct. 28 2015, Published 10:04 a.m. ET

Ocean Rig’s 3Q15 earnings

Ocean Rig (ORIG) will announce its 3Q15 earnings result on November 4, 2015. Wall Street analysts estimated the company’s 3Q15 EBITDA[1. earnings before interest, taxes, depreciation, and amortization] to be $240 million. Analysts have raised their EBITDA estimates from the one-month prior estimate of $236 million and the three-month prior estimate of $230 million.

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Stock price performance

Ocean Rig’s share price dropped by 40% from August 6, 2015, when it announced its 2Q15 results, until now. From the beginning of October to October 23, the company’s share price appreciated by 2%, whereas share prices for other offshore drilling (OIH) (IYE) (XLE) companies Pacific Drilling (PACD) and Transocean (RIG) rose by 33% and 26%, respectively. The share prices of Diamond Offshore (DO), Noble (NE), and Rowan Companies (RDC) jumped by 22% each.

New contracts for a few companies in October brought positive sentiments in the offshore drilling industry and share prices jumped. To know more about fleet reports in October, please see how the current slowdown impacts offshore rig day rates.

On the other hand, Ocean Rig’s fleet status report, and especially management’s plans, had a negative impact on its share prices. In the next few articles, we’ll explore more about the company’s fleet and management plans. Also, analysts don’t seem optimistic about Ocean Rig’s success in getting new contracts in coming quarters, unlike Pacific Drilling. The latter was the best performer in October. Investors can know more about analyst estimates for Pacific Drilling and our analysis of the same here.

Wall Street analysts’ target price

Wall Street analysts have a 12-month target price of $4.4 on the company against the current price of $2.1 on October 23. According to the consensus from Bloomberg, 47% of analysts recommend a “buy,” 35% recommend a “hold,” and 18% recommend a “sell.”

It’s important to analyze analyst estimates when looking at target prices. Last year when Ocean Rig was trading at $13.2, analysts had a 12-month target price of $19.4. In next few articles, we’ll analyze if analysts are optimistic or pessimistic about the company’s revenue, operating profits, and free cash flow. Also, we’ll analyze the risks facing Ocean Rig that compelled Moody’s to downgrade the company and change its outlook to “negative.”

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