NEW YORK (TheStreet) -- Shares of Atwood Oceanics (ATW) are slumping 5.25% to $31.79 after Goldman Sachs downgraded the Houston-based company to "neutral" from "buy" and lowered the price target to $27 from $34.
Analysts cited a shift in their portfolio leverage further towards U.S. onshore.
"GS Research expects the marginal growth in global oil demand to be met by US Shale and OPEC production, and forecasts offshore project sanctioning to be challenged for a few years driving weak demand for offshore rigs," analysts wrote. "We expect [fundamentals in offshore drilling] to remain very weak in the coming years as additional supply is under-construction."
They added that the company also faces significant re-contracting risk in 2017, which is becoming hard to ignore.
While Atwood remains the "best-in-class" offshore driller, Goldman analysts believe 2017 to be a particularly painful year, according to Barron's.
Atwood Oceanics is an offshore drilling contractor that engages in the drilling and completion of exploratory and developmental oil wells worldwide.
TheStreet Ratings team rates ATWOOD OCEANICS as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate ATWOOD OCEANICS (ATW) 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 robust revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. 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."