The firm cited that the floater rig count demand in second quarter 2015 fell similarly to the first quarter 2015. Contracting for this quarter was barely up but mostly for short-term work.
In addition, the pace of rigs moving to non-marketed supply has lagged behind the drop in demand compared to earlier in the year and this is due to more higher quality rigs going idle. Only nine rigs moved to non-marketed status this quarter compared to 21 rigs in the first quarter, according to the analyst note.
"We expect all of these trends to persist near-term," analysts said. "Shares look expensive, and we could see a further drift down for most names."
Noble operates as an offshore drilling contractor for the oil and gas industry worldwide. It owns and operates a fleet of mobile offshore drilling units.
On Thursday, shares closed down 2.49% to $14.88.
Separately, TheStreet Ratings team rates NOBLE CORP PLC as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
"We rate NOBLE CORP PLC (NE) a SELL. This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Energy Equipment & Services industry and the overall market, NOBLE CORP PLC's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has decreased to $368.58 million or 27.12% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- NE'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 47.65%, 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. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- The change in net income from the same quarter one year ago has significantly exceeded that of the Energy Equipment & Services industry average, but is less than that of the S&P 500. The net income has significantly decreased by 29.9% when compared to the same quarter one year ago, falling from $254.56 million to $178.40 million.
- NE's debt-to-equity ratio of 0.74 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.26 is sturdy.
- You can view the full analysis from the report here: NE Ratings Report