Transocean (NYSE:RIG) provides offshore drilling services for oil and gas wells. RIG stock has appreciated over 83% in the last three months, thanks to the stellar demand for its assets. The strong demand and robust backlogs indicate that RIG’s assets will witness higher asset utilization. Also, the company should deliver solid financials in the near future.
Regarding future prospects, Transocean’s CEO, Jeremy Thigpen, said that the momentum in the offshore drilling market will likely sustain. Moreover, Thigpen expects the demand for its high capability drilling rigs to remain strong, resulting in higher asset utilization and day rates.
According to a recent Wall Street Journal report, offshore rigs are a hot commodity. Citing S&P Global, the WSJ report highlighted that day rates are trending higher and have topped $400K, up from $300K in June.
While day rates remain high, BTIG analyst Gregory Lewis expects offshore spending to rise by 12% in 2023. The analyst added that underinvestment in the sector will benefit offshore service providers.
Lewis is upbeat about the sector and names Transocean as one of his top picks. Further, his price target of $8 implies 71.31% upside potential.
Is RIG Stock a Buy?
On TipRanks, RIG stock has a Hold consensus rating base on one Buy, two Hold, and one Sell recommendation. Meanwhile, due to the recent surge in its price, analysts’ average price target of $4.45 implies a downside of 4.71%.
Our data shows that hedge funds sold 4.9M RIG stock last quarter. However, insiders bought RIG stock worth $203K during the same period. Overall, RIG stock scores eight on TipRanks’ Smart Score system, implying outperformance.
Bottom Line
The sustained demand for its assets and services as well as the high day rates provide a solid foundation for growth for RIG stock. The recent increase in its price, however, might cap further upside potential.
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