Of the 32 analysts covering Ensco (ESV), 44% recommend a “buy” or equivalent for the stock. Among the top offshore drilling stocks (IYE), Ensco and Transocean (RIG) have the most “buy” recommendations. About 41% of analysts are recommending a “hold” for Ensco. The remaining 15% recommend a “sell.”
About 37% of the analysts covering Rowan Companies (RDC) have recommended a “buy.” For Diamond Offshore Drilling (DO) and Noble Corporation (NE), 13% and 27% of analysts, respectively, have given “buy” recommendations.
The consensus 12-month target price for Ensco of $7.49 implies an upside of 25.2%, based on its market price of $5.98 as of April 20.
Revenue and costs
After falling for four consecutive quarters, Ensco’s revenue rose for the first time in 3Q17. But this rise was temporary. Revenue fell again in 4Q17, and it’s expected to fall further in the first quarter. Analysts estimate ESV’s 1Q18 revenue at $426 million, which is 6% lower quarter-over-quarter and 9.4% lower year-over-year.
Ensco expects its drilling costs to decrease in the first quarter. The company expects a fall in its drilling expenses to $320 million from $334 million in the previous quarter. Also, a fall in its general and administrative expenses is expected in 1Q18.
Analysts estimate a steep fall in Ensco’s EBITDA (earnings before interest, taxes, depreciation, and amortization) to $73.9 million in 1Q18 from $98.4 million in the previous quarter. This fall represents a 25% quarter-over-quarter fall. Also, the EBITDA estimate represents a 55% fall year-over-year.
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In the next part of this series, we’ll look at analysts’ recommendations and earnings estimates for Noble Corporation.