Rowan Cos. Stock Slips As Credit Suisse Downgrades

SIOUX FALLS, S.D. (AP) — Shares of oil drilling contractor Rowan Companies Inc. fell more than 7 percent Monday morning after Credit Suisse downgraded the stock saying it is overvalued in its sector.

Shares, which have more than doubled in value since hitting a one-year low of $10.28 in February, lost $1.74, or 7.6 percent, to $21.44 in morning trading. The stock was trading over $45 a year ago.

Credit Suisse analyst Arun Jayaram lowered Rowan to "Underperform" from "Neutral" in a client note, saying that in a subdued growth environment, the market will increasingly focus on drillers' normalized earnings, which are adjusted to remove unusual or one-time influences.

The analyst said Rowan is one of the most expensive stocks in the group based on its analysis, and Transocean Ltd. and Noble Corp. are more attractively valued.

Jayaram said that the downgrade reflects Credit Suisse's preference for companies that are more focused on oil rather than "gassier equities" such as Rowan.

Credit Suisse upped its one-year target price for Rowan to $20 from $16. That price target implies downside of 13.8 percent from its closing price Friday of $23.19.