J.P. Morgan Lowers Transocean (RIG) Price Target To $80

J.P. Morgan analysts J. David Anderson, Adam Aron and Samantha Hoh maintained their Neutral rating for shares of Transocean Ltd RIG and lowered the price target to $80 per share, down from the previous price target of $87. The analysts noted that Transocean Ltd had been hit hard by concerns about liability for last months Deepwater Horizon incident and that the situation is an ongoing concern. They said that Transocean Ltd has five newbuild ultra deepwater floaters under construction and that any delivery delays could lower the company's 2011 EPS. The J.P. Morgan analysts also wrote, "Petrobras decision could go either way. Scenario 1: Petrobras could delay 28 newbuild tender or otherwise may be forced to the open market for rigs, then floater dayrates could unexpectedly shift higher, which would be positive for the entire market, lifting all boats. At the same time, RIG has less near-term earnings upside and would likely underperform. Scenario 2: Petrobras goes ahead with plans and does not come to market, leaving the floater market oversupplied. Rates would move lower; however, Transocean would likely outperform because of its higher contracted status."