Barclays Raises Aggressive Price Target on Transocean (RIG); More Catalysts Ahead

March 5, 2013 3:13 PM EST
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Price: $15.31 +1.46%

Rating Summary:
    12 Buy, 24 Hold, 11 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 30 | Down: 30 | New: 23
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Barclays bumped estimates and its priced target on Overweight-rated Transocean (NYSE: RIG) from $70 to $71 Tuesday following Q4 results and update.

The firm said the stock remains one of their favorite offshore drillers and despite several recent catalysts unfolding (settlement with the DOJ, the announcement of a proposal to reinstate the dividend, and greatly improved revenue efficiency) they see more catalysts ahead. These include a final resolution of the full Macondo liability, deleveraging, and the unveiling and execution of a new organizational efficiency effort targeted at bridging the margin gap between Transocean and its peers, according to the analyst.

The proposed $2.24/sh dividend, while below Icahn's $4/sh suggestion, is in line with what they believe were market expectations.

On the discloser that the company is "seriously" looking into an MLP structure, the firm said, "We think an MLP could make more sense for RIG than other drillers considering the long-term contracts on various units."

The firm adjusted 2013 and 2014 EPS estimates to $5.20 (from $5.00) and to $6.25 (from $5.95), as lower interest and tax expectations as well as higher dayrates from the company's recent fleet status report offset incremental downtime.

For an analyst ratings summary and ratings history on Transocean click here. For more ratings news on Transocean click here.

Shares of Transocean closed at $52.19 yesterday.

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