Nabors Industries (NBR) Stock Downgraded at BMO Capital Markets

NEW YORK (TheStreet) -- BMO Capital Markets downgraded Nabors Industries (NBR) to "market perform" from "outperform" on Wednesday.

The analyst firm set a price target of $18 for the oil company.

BMO also lowered its 2015 EPS estimates for Nabors to a loss of 7 cents from its previous estimate of a loss of 1 cent a share. The analyst firm raised its 2016 EPS estimates for the company to 34 cents a share from 19 cents a share "due to updated estimates for Equity Income related to CJES."

BMO analysts said the downgrade is due to Nabors having "limited upside to consensus estimates in 2016, less attractive risk reward, and risk to AC rig market share given that 42% of its AC fleet is comprised of less competitive sub-1,500hp rigs."

Separately, TheStreet Ratings team rates NABORS INDUSTRIES LTD as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:

"We rate NABORS INDUSTRIES LTD (NBR) 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 increase in net income, expanding profit margins and growth in earnings per share. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and a generally disappointing performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • 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 144.0% when compared to the same quarter one year prior, rising from $50.67 million to $123.63 million.
  • 35.00% is the gross profit margin for NABORS INDUSTRIES LTD which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 8.73% is above that of the industry average.
  • NABORS INDUSTRIES LTD reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, NABORS INDUSTRIES LTD swung to a loss, reporting -$2.35 versus $0.51 in the prior year. This year, the market expects an improvement in earnings (-$0.16 versus -$2.35).
  • NBR's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 40.59%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. 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.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Energy Equipment & Services industry and the overall market, NABORS INDUSTRIES LTD's return on equity significantly trails that of both the industry average and the S&P 500.
  • You can view the full analysis from the report here: NBR Ratings Report
Must Read: Warren Buffett's Top 25 Stocks for 2015

More from Markets

Verizon Proves Resilient in Sell-Off; Decoding the Facebook Short -- ICYMI

Verizon Proves Resilient in Sell-Off; Decoding the Facebook Short -- ICYMI

Three Big Factors That Rocked the Stock Market Tuesday

Three Big Factors That Rocked the Stock Market Tuesday

Dow Tumbles Over 400 Points; S&P 500 and Nasdaq Also Finish Lower

Dow Tumbles Over 400 Points; S&P 500 and Nasdaq Also Finish Lower

Caterpillar Bulldozes Industrial Sector With Bad News on Earnings Call

Caterpillar Bulldozes Industrial Sector With Bad News on Earnings Call

Jim Cramer: If You're Afraid of the 10-Year Yield, Go to Cash

Jim Cramer: If You're Afraid of the 10-Year Yield, Go to Cash