NEW YORK (TheStreet) -- Shares of Atwood Oceanics (ATW) are declining 2.25% to $8.24 in early morning trading on Monday after the company was downgraded to "underweight" from "equal weight" at Barclays as analysts see a potential 30% downside to the stock's current price.
The firm lowered its price target to $6 from $7 for the Houston-based offshore drilling contractor.
Overall, the offshore drilling industry is not expected to recover until early 2018, even if oil prices increase to $50 per barrel by the end of 2016, Barclays analysts wrote in a note this morning.
"[W]e are taking a more conservative stance on recontracting and adjust every company's fleets to assume all currently idle rigs don't work until 2018 and rigs coming off contract between now and then have a 25% success rate of being extended/recontracted," analysts added.
Separately, Atwood Oceanics has a "hold" rating and a letter grade of C- at TheStreet Ratings because of the company's strengths, such as largely solid financial position, notable return on equity and reasonable valuation levels, and its weaknesses, including generally disappointing stock performance and feeble earnings per share growth.
You can view the full analysis from the report here: ATW
TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this article's author.