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The Word on the Street: What Analysts Recommend for Transocean after 1Q16

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Transocean’s analyst recommendations

We’ve already looked at what Wall Street analysts are estimating for Transocean’s revenue and EBITDA (earnings before taxes, depreciation, and amortization). Now let’s look now at what analysts are recommending for Transocean’s and other offshore drilling companies’ (OIH) stock.

Of the 38 analysts covering Transocean (RIG), only 5% have given it a “buy” recommendation, while 32% have given it a “hold” recommendation, and 63% have recommended a “sell” for the stock. The average target price for RIG is $8, as compared to its current market price of $10.82. This implies a potential downside of 26%. KLR Group has issued the highest target price of $19. The lowest target price of $5 came from Piper Jaffray, Credit Suisse, and Barclays.

The Word on the Street: What Analysts Recommend for Transocean ahead of 1Q16 Results

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Recent changes

Some analysts changed their recommendations in March and April, however. Nomura, for example, initiated coverage of Transocean in April and gave a recommendation of “reduce” with a target price of $7. Pareto Securities reduced its price target from $16 to $14 for RIG, changing its rating to “buy” from “hold.

On the other hand, Fearnley Securities downgraded Transocean to “sell” from “reduce,” and Goldman Sachs changed its recommendation from “sell-neutral” to “sell-cautious.”

Peer recommendations

Notably, Noble (NE) and Rowan Companies (RDC) have the highest percentage of “buy” recommendations among peers. RDC has “buy” ratings from 35% of analysts, and Noble has 28%. As with Transocean, only 5% of analysts have given “buy” recommendations for Diamond Offshore (DO). No analyst recommends a “buy” for Seadrill (SDRL).

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