The firm says it initiated coverage on the offshore drilling contractor as it believes oil prices are too low for the company to produce satisfactory returns for investors.
Canaccord also said it believes the company will cut its dividend due to the likelihood "benign debt markets will not persist amid a backdrop of few new contracts."STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.
"We expect a decision to skip dividends is likely in the next six to nine months. We also see a risk that development projects (e.g. Russia) are delayed or canceled," the firm added.
Separately, 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 number of 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 notable return on equity and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."