Stock Analysis & Ideas

Here’s Why Transocean (NYSE:RIG) Stock Has Nearly Doubled in Six Months

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Transocean stock has gained over 99% in six months. The company’s backlogs and utilization remain strong.

Transocean (NYSE:RIG) provides offshore drilling services. Thanks to the solid demand for offshore drilling, Transocean stock has gained about 48% year-to-date. Moreover, it has nearly doubled, up approximately 99.41% in six months. 

Transocean is benefitting from new multi-year contracts and high utilization of its assets. Further, its backlogs remain strong. Per the company’s October 2022 fleet status report, RIG had a contract backlog of $7.3 billion, which augurs well for future growth. 

Looking ahead, the company expects the active utilization of its assets to remain very high. Transocean’s CEO, Jeremy Thigpen, said, “We have definitely entered a multiyear upcycle.” He added that the demand for RIG’s assets and services remains strong. Moreover, higher cash flows from increased day-rate contracts will strengthen its balance sheet

BTIG analyst Gregory Lewis said, “The offshore driller market is experiencing an ongoing upcycle with leading edge drillship dayrates having more than doubled since early 2021 to over $450k/d, which is their highest level since 2015.” 

Lewis is bullish about Transocean with a price target of $10, implying 48.37% upside potential.

Is Transocean a Buy or Sell?

Transocean stock has three Buy, two Hold, and one Sell recommendations for a Moderate Buy consensus rating. Moreover, due to the recent appreciation in its price, analysts’ average price target of $6.25 implies a downside of 7.27%. 

Our data shows that hedge funds are lowering their exposure to RIG stock and sold 4.9M shares last quarter. Nevertheless, insiders bought Transocean stock worth $203K. Overall, Transocean has an Outperform Smart Score of nine.


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