SDRL stock continues to move lower in Tuesday’s session after Carnegie Investment Bank suggested selling Seadrill Ltd (NYSE:SDRL) shares amid mounting recovery worries.
Carnegie Investment Cuts PT By 88%
Bermuda incorporated deepwater drilling contractor Seadrill seems to be in all sorts of trouble less than a year after its bankruptcy crisis. In a new and alarming development, it has emerged that Carnegie Investment Bank AG has given a sell rating on the company’s shares and slashing SDRL stock by a whopping 88%.
Investors did not take long to act upon the recommendation, dropping SDRL like a burning hot cake.
The company, which is engaged in taking up contracts for drilling offshore rigs, has been in some trouble lately. Recovery in the contracts market has stagnated, and Seadrill is finding it tough to recover fast enough.
Carnegie had once upon a time given SDRL stock a buy rating, with a price target of 210 kroner for the Norwegian markets, but now it has turned around completely, giving a sell rating with a target price of 25 kroner.
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SDRL stock is down over 21% and now selling at $4.32 on the NYSE on very unusual volume. The stock made a new low of $4.27 earlier in the session.
High Debt
The company had liabilities to the tune of $7.8 billion by the time the first quarter ended, but since then there have not been any signs of improvement. The analyst at Carnegie stated, “We see a high probability of liquidity drying up by 2021/22. The severe cut in target price is a function of the high debt.” However, despite all the gloom and doom, it is necessary to point out that ultra-deepwater drilling for Diamond Offshore Drilling Inc is due to start are some point in next year or in 2022. It could lead to earnings of $295,000 a day, but Seadrill believes it could be around $400,000. Hence, the research report by Carnegie has stated that recovery is behind schedule.
SDRL stock has underperformed the broader market with a fall of 58% so far in 2019.
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