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Analysts Love Ensco: A Closer Look

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ESV’s analyst recommendations

In this series, we’ll discuss analysts’ ratings and recommendations for offshore drillers, starting with Ensco (ESV). Of the 31 analysts covering Ensco, 45% recommend “buy” or some equivalent, 39% recommend “hold,” and 16% recommend “sell.” Among the top offshore drilling stocks (IYE), Ensco has the highest percentage of “buy” recommendations.

Analysts’ 12-month target price of $6.49 implies 3.6% downside based on the stock’s May 24 market price of $6.73. Since the beginning of the year, two analysts have downgraded Ensco, and one analyst has upgraded the stock:

  • In January, Piper Jaffray and Credit Suisse downgraded Ensco to “neutral.”
  • In April, Credit Suisse upgraded the stock to “outperform” from “neutral.”
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Target price revisions in May

  • On May 24, Wells Fargo raised its target price for Ensco to $7 from $5. Earlier in the month, it had reduced Ensco’s target price to $5 from $6.
  • Bank of America Merrill Lynch raised Ensco’s target price to $5.50 from $3.50. It also raised its target price for Transocean (RIG) to $15 from $14, upgraded Rowan Companies (RDC) to “neutral” and raised its target price to $17 from $9, and raised Noble’s (NE) target price to $4 from $3.

First-quarter results

Ensco reported a loss of $0.32 per share in the first quarter, compared with a loss of $0.09 per share a year ago. The company secured three-year contracts in the Middle East for its three jack-up rigs, and the company’s new drillship commenced its maiden contract in Nigeria. Ensco repurchased $722 million in nearest-term maturities. To learn more about the company, read Market Realist’s Ensco: A Sneak Peak into the Second Quarter.

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