UPDATE: BMO Capital Downgrades Atwood Oceanics (ATW) to Underperform
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(Updated - October 17, 2016 9:07 AM EDT)
BMO Capital downgraded Atwood Oceanics (NYSE: ATW) from Market Perform to Underperform with a price target of $7.00 (from $8.00).
Analyst Daniel J. Boyd summarized the downgrade in a note, writing, "Our stress test suggests that ATW is most at risk of needing to raise capital. We see liquidity risk in 2Q18 unless ATW is able to defer $400mn of payments related to two uncontracted UDW rigs, in which case the risk is pushed to 2Q19. Net-debt/2018E EBITDA is 9x and current liquidity is $715mn but we view effective liquidity as $290mn. ATW’s balance sheet concerns are not new (40% of float is short) but the stock has been 'squeezed' 26% higher since the OPEC announcement and ATW is now the best performing peer YTD. But $50-55 oil is not enough for the deepwater rig market, and even if oil trades above $60, we think a recovery would be gradual, especially with 32 UDW rigs currently idle."
Shares of Atwood Oceanics closed at $9.10 yesterday.
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Create E-mail Alert Related CategoriesAnalyst Comments, Analyst EPS View, Analyst PT Change, Downgrades
Related EntitiesBMO Capital, OPEC
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