Tuesday, October 19, 2010

Transocean (NYSE:RIG): Light at the End of the Tunnel?

Based on a couple of assumptions, Natixis Bleichroeder said Transocean (NYSE:RIG) may be out of the woods, upgrading the company to "Buy."

"In our previous update for Transocean, we had assumed lower dayrates for deepwater rigs drilling in the U.S. Gulf of Mexico based on uncertainties surrounding the Macondo incident. With the end of the deepwater moratorium, renegotiations on most contract disputes, and lack of successful force majeure proceedings, we believe that most contracts will be honored at their original contracted dayrates. Assuming BP (NYSE:BP)honors its contractual indemnity with RIG, and based on Transocean's history as a premiere offshore driller, we believe that RIG is likely “out of the woods,” said Natixis

The market seemed to agree with them Monday, as Transocean closed at $68.38, gaining $1.30, or 1.94 percent. Volume for the day was 5,242,999, down from the 3-month daily average of 8,361,270.


  1. RIG's PER is at a big discount from market averages
    yet its EPS is growing faster,
    As RIG begins to sell just in line of the market's approx 20 PER, RIG should be priced around $140-160.
    And when RIG will be priced at a premium PER because of of its above average PER growth, we can see RIG above $200

  2. To be specific
    RIG's EPS has grown 51% per year, on average, in the last five years,
    according to Yahoo Finance numbers.
    That is a better growth rate than stellar companies like Google,
    and about five times faster than most blue chips' EPS ggrowth on the NYSE.