Credit Suisse Cuts Seadrill Price Target Following Dividend Suspension
In a research report issued today, Credit Suisse analyst Gregory Lewis maintained a neutral rating on Seadrill (NYSE:SDRL), and reduced his price target to $20 (from $30), as the company’s board of directors decided to suspend dividend payments.
Lewis wrote, “SDRLs decision to suspend the dividend was prudent. With the stock yielding 20% on the previous $4 targeted annual dividend, confidence in the dividend was lacking to say the least. We believe the decision to eliminate the dividend also represents a changing of the guard. We expect a more conservatively run, less leveraged business which is prudent in the current market – but also expect less outside the box thinking.”
The analyst added, “While SDRL will retain roughly $2B annually from the dividend suspension, this money will be used to fund current newbuilds (previous attempts to sell some were unsuccessful), pay down debt and buyback stock. Buying stock into an uncertain oil price market and an uncertain 2016 drilling market takes resolve.”
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Gregory Lewis has a total average return of -14.8% and a 18.2% success rate. Lewis is ranked #3299 out of 3405 analysts.