Jefferies Upgrades Nabors (NBR) to Hold

Jefferies upgraded Nabors (NYSE: NBR) from Underperform to Hold with a price target of $8.00.

Analyst Brad Handler commented: "Our Underperform rating on NBR reflected our concerns regarding 1) its U.S. AC fleet, which we feared was less robust in the aggregate than investors understood and thus subject to more utilization or dayrate pressure over time (and we would argue that NBR’s indications late last year of intended upgrades to its F-series AC rigs were a strong example of such weakness); and 2) utilization and dayrate risk to its non-U.S. fleet as larger rigs came off contract late in 2015 and more generally as softer activity pervades through 2017. Those risks persist, and we are indeed below Consensus estimates for 4Q15, which may reflect some of the international conditions (finally) impacting performance. However, we believe both risks are far more clearly understood by investors at this point. Further, we find the stock fairly valued today—we model recovery as we do for the rest of our coverage, but with measures of conservativism, in our view, with respect to the impact of these aforementioned issues on the P&L and relatively higher ongoing capex requirements to in part reflect the company’s attempts to upgrade its U.S. fleet."

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

Shares of Nabors closed at $6.93 yesterday.

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