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The Anlayst Downgrade for Ensco in March


Mar. 31 2016, Published 11:49 a.m. ET

Ensco has been downgraded

On March 28, 2016, Barclays downgraded Ensco (ESV) from “equal weight” to “underweight.” The target price was also reduced to $7. The revised price target points to a potential downside of 35% from its March 28, 2016, closing price of $10.72.

On the same day, Susquehanna Financial also downgraded Ensco from “neutral” to “negative.” It didn’t change its price target of $8.

Earlier this month, Fearnley gave Ensco a “sell” from its earlier recommendation of “reduce,” keeping the price target constant at $9.

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Series focus

In this series, we’ll look at Ensco’s downgrade as well as the company’s fundamentals. We’ll assess the company’s backlog position to figure out its future revenues and analysts’ estimates for its revenues and EBITDA (earnings before interest, tax, depreciation, and amortization). We’ll lalso look at the company’s leverage position and what measures the company is taking to weather the downturn. We’ll end the series by looking at Ensco’s valuations.

‘Buy’ recommendations

Not all analysts covering Ensco dislike the stock. Of the 35 analysts covering it, 9% have given it a “buy” recommendation. The company has more “buy” recommendations than Diamond Offshore Drilling (DO) and Transocean (RIG) with 6% and 5% of analysts, respectively, recommending a “buy.” But Ensco’s other peers have more “buy” recommendations. Rowan Companies (RDC) has “buy” recommendations from 35% of analysts. Ocean Rig (ORIG) has 14%. To learn more about analyst recommendations for nine offshore drillers, read our comparative series.

ETFs for offshore drilling companies

For exposure to offshore drilling companies, investors can invest in ETFs such as the VanEck Vectors Oil Services ETF (OIH), the Energy Select Sector SPDR (XLE), and the iShares US Energy (IYE). To learn more about investing in offshore drillers, read ETF Exposure in the Offshore Drilling Space. In the next article, we’ll analyze Ensco’s backlog to gauge its future earnings.

In the next part of our series, we’ll look at Ensco’s backlog to gauge the company’s future earnings.


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