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Deutsche Bank Downgrades Hercules Offshore (HERO) to Sell, Price Target $0.0

February 27, 2015 6:44 AM EST
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Price: $20.65 --0%

Rating Summary:
    3 Buy, 8 Hold, 5 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 8 | Down: 4 | New: 36
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Deutsche Bank downgraded Hercules Offshore (NASDAQ: HERO) from Hold to Sell. Earlier the company announced that it has received a notice from Saudi Aramco terminating its drilling contract for the Hercules 261, effective March 27, 2015. Analyst Mike Urban sees little value for equity holders, and lowered his price target on the stock to $0.

"The offshore drilling market continues to deteriorate at an accelerating pace as evidenced by a recent wave of contract terminations including HERO's Rig 261. With demand nearly non-existent and a steady stream of new capacity entering the market, the prospect for recovery in the short to intermediate term is bleak. Although bankruptcy is not a foregone conclusion as HERO has significant undrawn capacity on its revolver and could potentially raise additional capital against its international assets, this would simply fund the cash burn we expect going forward leaving little/ no equity," said Urban.

"With the continued deterioration in the offshore market, including today’s announcement on the 261, we are cutting out 2015 and 2016 estimates to ($1.53) and ($1.85) from ($0.45) and ($0.70), respectively," he added.

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

Shares of Hercules Offshore closed at $0.73 yesterday.



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