Goldman Sachs Downgrades Hercules Offshore (HERO) to Sell

Goldman Sachs downgraded Hercules Offshore (NASDAQ: HERO) from Neutral to Sell with a price target of $3.60 (from $4.60).

Analyst Waqar Syed said, "We downgrade HERO from Neutral to Sell and lower our 12-month target price to $3.60 from $4.60 (17% downside vs. 2% average coverage upside). We also cut our 2014/15 EBITDA by 25%/13%. After the close on June 19, HERO announced contract cancellation for 2 jack-ups putting at risk ~$300mn of revenues modeled for the next 3 years. While the stock’s 11.7% fall on June 20 somewhat reflects this news, it doesn’t fully incorporate weakening near-to-medium term fundamentals. Moreover, revised consensus estimates are still too high, in our view. HERO’s GOM based jack-up fleet faces utilization challenges owing to hurricane season, customer consolidation and likely influx of rigs from Mexico."

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 $4.36 yesterday.

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