Update (9:42 a.m.): Updated with Monday market open information.
NEW YORK (TheStreet) -- Morgan Stanley downgraded Rowan Companies (RDC - Get Report) to "underweight" and set a $33 target price. The firm sees risk to the jackup market and the company's ability to execute.
The stock was down 2.71% to $31.59 at 9:41 a.m. on Monday.
Separately, TheStreet Ratings team rates ROWAN COMPANIES PLC as a "hold" with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate ROWAN COMPANIES PLC (RDC) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income and a generally disappointing performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- RDC's revenue growth has slightly outpaced the industry average of 8.2%. Since the same quarter one year prior, revenues rose by 11.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Despite currently having a low debt-to-equity ratio of 0.41, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 4.05 is very high and demonstrates very strong liquidity.
- In its most recent trading session, RDC has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Energy Equipment & Services industry. The net income has decreased by 8.1% when compared to the same quarter one year ago, dropping from $54.07 million to $49.70 million.
- You can view the full analysis from the report here: RDC Ratings Report