Transocean Stock Drilled by Downgrade

Citigroup downgraded RIG to "neutral" from "buy"

Managing Editor
Jun 14, 2019 at 9:42 AM
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Oil-and-gas stocks were in focus yesterday, after the tanker attacks near the Gulf of Oman and the subsequent rise in oil prices. This put drilling issue Transocean Ltd (NYSE:RIG) in the crosshairs yesterday, and even more so today after Citigroup downgraded the stock to "neutral" from "buy" and slashed its price target to $6.70 from $11. 

In response, Transocean stock is down 2.7% to trade at $5.53, dangerously close to its $5.45 record low from yesterday. After a swift rejection by their 160-day moving average in April, the shares have shed nearly half their value and are heading toward their eighth straight weekly loss. It's just as bleak longer term; RIG now sports a 56% year-over-year deficit.

For a stock that's struggled so much, its surprising to see so many analysts remain in the bullish camp. Of the 33 brokerages covering RIG, 22 rate it a "buy" or better. Plus, the consensus 12-month price target of $12.12 sits up in territory not seen since mid-October. 

There is a healthy amount of short interest tied up to the stock. The 61 million shares sold short accounts for 10.7% of RIG's total available float, and four times the average daily trading volume.

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