RIG Stock (NYSE:RIG)
On Thursday, RIG stock rose 6.7% after Barclays raised its rating on the stock to Overweight from Underweight and increased its price target for the RIG stock from $3.50 to $5. The upgrade resulted from the investment bank’s expectation that day rates would increase to $500,000 from $400,000 in the coming year.
Although Transocean’s (NYSE:RIG) debt burden is a cause for worry, Barclays feels the offshore drilling market outlook has improved dramatically. As a result, the company’s risk-reward profile is “now much more appealing at present valuation levels in light of the huge rise in pricing we’ve observed for high-spec offshore rigs the last 3-4 months — multiple long-term contracts for $440K/day.”
Transocean (NYSE:RIG) utilizes several tools to reduce debt and delay maturities, expecting the company’s free cash flow to increase to over $900 million annually beginning in 2024.
TechnipFMC (NYSE:FTI) shares gained 5% on Thursday after Barclays raised their price objective for RIG stock from $9 to $14, highlighting the company’s “materially reduced” deepwater cost structure over the last five years.
Despite a 40% drop in orders this year, TechnipFMC is expected to see profit growth and free cash flow creation as a result of “sustained momentum” over the next few years and improved pricing (due to recent capacity reduction and industry consolidation).
With investment in offshore oilfields expected to increase, Schlumberger is Barclays’ top selection in the sector.
Anna Sokolidou recently released an analysis on Seeking Alpha, noting that RIG stock “has been unduly depressed for a long time” and that the offshore drilling industry is “recovering swiftly.”
Featured Image- Megapixl @ Rafaelhenriquepress
Author Shariq Khan 
