Why Transocean (RIG) is Falling Today

NEW YORK (TheStreet) -- Transocean (RIG) was falling 1.2%to $42.50 Thursday on news of lower rig utilization that might not pick up for 18 to 24 months.

The offshore drilling company reported a 49% drop in profit in the fourth-quarter to $233 million, down from $456 million in the year-ago quarter. The drop in profit was due to lower rig utilization, with only 75% of Transocean's fleet used in the quarter, compared to 83% in the third quarter.

During the company's earnings call, senior vice president of marketing Terry Bonno said Transocean's partners are delaying drilling programs and are increasingly sub-letting rigs. The company said it could take 18 to 24 months for demand to recover.

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TheStreet Ratings team rates TRANSOCEAN LTD as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:

"We rate TRANSOCEAN LTD (RIG) 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 compelling growth in net income, revenue growth and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and a generally disappointing performance in the stock itself."

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