Analyst Update: Sonic Corporation, InterOil Corporation, and Seadrill Ltd

Analysts adjusted their ratings on Sonic Corporation (SONC), InterOil Corporation (USA) (IOC), and Seadrill Ltd (SDRL)

by Mark Fightmaster

Published on Sep 15, 2015 at 12:42 PM

Analysts chimed in on fast-food firm Sonic Corporation (NASDAQ:SONC), oil-and-gas producer InterOil Corporation (USA) (NYSE:IOC), and offshore drilling contractor Seadrill Ltd (NYSE:SDRL). Here's a quick roundup of today's brokerage notes on SONC, IOC, and SDRL.

  • SONC is another in a line of restaurants making news today, as it has slipped 9.7% to $24.95 this afternoon, after announcing same-store sales data for fiscal 2015 last night. Apparently, investors weren't impressed with Sonic Corporation's results -- and neither was Guggenheim Securities, which cut SONC's price target to $34 from $37, but maintained a "buy" rating. This move counterbalanced a UBS upgrade to "neutral" from "sell" for the burger baron. Technically, the stock has slipped 32% from its late-March record high of $36.73. However, the shares seem to have found a measure of support from their 80-week moving average, which contained a recent pullback. A shift in analyst coverage could give this potential level of support a rather stern test, though. At last check, SONC sports seven "strong buy" ratings out of 13 total. Downgrades from this lofty perch could force the stock lower still.
  • IOC is 5.4% higher at $35.73 this afternoon, after Goldman Sachs added the offshore drilling contractor to its conviction list, citing "strong flow test results" from the company's Antelope drilling well and optimism over M&A activity within the sector. InterOil Corporation (USA) is also benefiting from oil's jump above $46 per barrel. During the week of July 3, IOC hit an annual high of $61.15, but was not able to conquer resistance from its 320-week moving average. Since then, the shares have shed 42% and have lost potential support from a veritable rainbow of trendlines. Despite this uninspiring performance, all four of the analysts tracking IOC rate it a "buy" or better. Downgrades from this sunny bunch could result in further pressure on a struggling stock.
  • SDRL is 8.4% higher at $7 today, after announcing that it is cancelling its West Mira construction contract. This news -- and crude's big bounce -- has been more than enough to withstand a price-target cut to $7.50 from $9 by Global Hunter Securities -- the brokerage firm's second such bearish note in recent weeks. Much like IOC, Seadrill Ltd has plummeted over the long term, and is currently backing away from resistance leveled by its 10-week moving average. Short sellers have taken this opportunity to stock up on the firm, as 13.7% of the equity's float is sold short. What's more, five of the eight analysts tracking SDRL rate it a "hold" or worse. While good news could prompt any among this group to make a move (and potentially spark a short-covering rally) -- there are several technical hurdles to overcome, which could prove to be more strain than the stock can bear.
For other stocks in analysts' crosshairs, read Analyst Upgrades: Fitbit Inc, Myriad Genetics, Inc., and Nordstrom, Inc. and Analyst Downgrades: American Express Company, American Eagle Outfitters, and United Natural Foods, Inc.

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