Wells Fargo Upgrades Rowan Companies to ‘Outperform’

Analysts’ consensus rating for Rowan (RDC) is 2.6, which means a “hold.” Peers Transocean (RIG), Diamond Offshore (DO), Noble (NE), and Ensco (ESV) also have “hold” ratings.

Of the 31 analysts covering Rowan (RDC), 39% recommend “buy” or some equivalent, 55% recommend “hold,” and 6% recommend “sell.” Among the top offshore drilling stocks (IYE), Rowan has the highest percentage of “hold” recommendations. 

Analysts’ 12-month target price of $15.50 implies a 3.6% downside based on the stock’s May 24 market price of $16.07. Since the beginning of the year, two analysts have downgraded Rowan Companies, and two analysts have upgraded the stock:

• In January, Piper Jaffray downgraded RDC to “neutral” from “overweight,” and Barclays downgraded RDC to “underweight” from “equal weight.”
• In May, Bank of America Merrill Lynch upgraded the stock to “neutral” from “underperform,” and Wells Fargo upgraded Rowan Companies to “outperform” from “market perform.”

• Wells Fargo raised RDC’s target price to $20 from $12.
• Bank of America Merrill raised RDC’s target price to $17 from $9.
• Credit Suisse raised RDC’s target price to $15 from $14.
• RBC raised RDC’s target price to $16 from $14.

On May 22, Rowan Companies announced that it had amended the agreement governing its existing revolving credit facility and entered a new agreement providing additional unsecured revolving credit. The new five-year facility will give Rowan a borrowing capacity of $955 million. To learn more about the company, read Market Realist’s Rowan Companies Reports Loss in 1Q18, Stock Falls.