The offshore drilling contractor received a ratings downgrade to "neutral" from "outperform" at Credit Suisse (CS).
The firm said the company misjudged the market in the face of softer floater day rates, and has too many new ships coming online.
The firm also lowered their price target to $30 from $40.
TheStreet Ratings team rates SEADRILL LTD as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate SEADRILL LTD (SDRL) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity, expanding profit margins, good cash flow from operations and compelling growth in net income. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 8.2%. Since the same quarter one year prior, revenues rose by 21.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Energy Equipment & Services industry and the overall market, SEADRILL LTD's return on equity significantly exceeds that of both the industry average and the S&P 500.
- The gross profit margin for SEADRILL LTD is rather high; currently it is at 58.13%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 15.72% is above that of the industry average.
- Net operating cash flow has significantly increased by 104.14% to $492.00 million when compared to the same quarter last year. In addition, SEADRILL LTD has also vastly surpassed the industry average cash flow growth rate of 23.12%.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Energy Equipment & Services industry. The net income increased by 1200.0% when compared to the same quarter one year prior, rising from -$21.00 million to $231.00 million.
- You can view the full analysis from the report here: SDRL Ratings Report