FBR Capital Cuts Price Target on Transocean (RIG), Keeps Bullish Rating

March 5, 2013 8:09 AM EST
Get Alerts RIG Hot Sheet
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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FBR Capital cut its price target on Transocean (NYSE: RIG) from $68 to $60 but maintained an Outperform rating.

The firm comments, "In our view, the de-risking story continues to play out with the settlement of civil and criminal liabilities related to the Macondo oil spill and, most recently, the proposal to reinstate a healthy dividend. Furthermore, it does seem as though management is looking seriously at an MLP structure, although this is most likely to be a 2014 event."

The firm lowered 2013 EPS estimate to $4.65 from $5.00.

On the dividend. While the $2.24 per share is below the $4 per share activist shareholder Carl Icahn has pushed for it still offers a healthy dividend yield of 4%. The firm said the $4 is "unreasonably high and could put the company's debt rating at risk with rating agencies." That said, they would not be surprised to see Ichan present his case for the higher dividend at the annual meeting.

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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