Analyst Update: Transocean LTD, Diana Shipping Inc., and Wayfair Inc

Analysts offered their two cents on RIG, DSX, and W

by Andrea Kramer

Published on Oct 27, 2014 at 1:34 PM
Updated on Apr 20, 2015 at 5:32 PM

U.S. stocks are modestly lower at midday, as Wall Street digests the latest earnings and economic reports, along with a downwardly revised crude forecast from Goldman Sachs. The brokerage firm also weighed in on commodity concern Transocean LTD (NYSE:RIG), while dry bulk shipper Diana Shipping Inc. (NYSE:DSX) and Wall Street rookie Wayfair Inc (NYSE:W) are reacting to their own brokerage notes.

  • RIG is down 4.2% at $28.93 -- likely to the delight of recent option sellers -- after Goldman Sachs took a hatchet to several price targets under the offshore drilling umbrella. For RIG, specifically, the analysts cut their price target to $18 from $26, and underscored a "sell" suggestion. Negative analyst notes are nothing new for Transocean LTD, though, as just one out of 17 maintains a "strong buy" opinion. Meanwhile, the security's Schaeffer's put/call open interest ratio (SOIR) of 2.41 sits just 2 percentage points from a 52-week peak, implying that short-term options speculators have rarely been more put-biased during the past year. It's no wonder, as RIG has surrendered 41.4% in 2014, pressured beneath its 10-day and 20-day moving averages.

  • Likewise, DSX was last seen 6.1% lower at $8.13 -- and earlier came within striking distance of a new annual low, bottoming at $7.82 -- after Jefferies waxed pessimistic on the dry bulk shipping sector. For DSX, specifically, the brokerage firm sliced its price target to $10 from $18, and downgraded the shares to "hold" from "buy." Diana Shipping Inc. has given up 38.8% so far this year, yet today's downgrade represents a shift in sentiment among analysts. In fact, DSX boasts six "buy" or better ratings, compared to three "holds" and not a single "sell." Plus, the average 12-month price target of $13.25 represents expected upside of 63% to the stock's current perch. Additional downgrades and/or price-target cuts could push DSX into new-low territory.

  • Finally, W is bucking the trend lower, up 4.5% at $26.30. Nevertheless, the security is trading at a 27% discount to its Oct. 2 IPO price of $36, but analysts are optimistic toward the online home-goods retailer. No fewer than eight brokerage firms offered their two cents on Wayfair Inc, and Piper Jaffray said the company's sales could grow significantly in the coming years, offering up an "overweight" rating and $40 price target. Likewise, Goldman Sachs and Citigroup initiated coverage with "buy" endorsements, and Pacific Crest, Wells Fargo, Cowen and Company, and Raymond James launched coverage with "outperform" recommendations.

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