BTIG Sees Upside for This Oil Drilling Name

The penny stock could clear a key trendline today

Digital Content Manager
Sep 6, 2022 at 9:25 AM
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The shares of Transocean LTD (NYSE:RIG) are higher this morning, last seen up 2.8% at $3.66, after BTIG upgraded the security to "buy" from "neutral." The analyst noted that there could be some improvement to the company's balance sheet, thanks to better day rates. 

The oil and gas drilling name has already added nearly 29% this year, though recent pressure at the $3.85 level has kept a lid on additional upside. The stock has been struggling at the recently supportive 20-day moving average, logging two-consecutive sessions below here last week. However, today's jump could put RIG back above this trendline. 

Analysts were hesitant coming into today, with just one calling RIG a "strong buy," compared to four "hold" or worse ratings. Meanwhile, the 12-month consensus price target of $4.33 is a 21.6% premium to Friday's close. 

There's been a drop in short interest, off 9.4% in the last reporting period. However the 4.54 million shares sold short still make up 9.9% of the stock's available float, which could leave additional room for a short squeeze. 

Now could be the time to speculate on RIG's next move with options. The security's Schaeffer's Volatility Index (SVI) of 79% stands higher than just 20% of readings from the past 12 months. In other words, options traders are pricing in relatively low volatility expectations at the moment. 

 

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