Shares of Transocean Inc., the world's largest offshore oil drilling contractor, edged down from their highs in premarket electronic trading Thursday as analysts said the stock has reached a fair price.
The company said its profit more than doubled due to its buyout of rival GlobalSantaFe Corp., and Transocean's net income and revenue both surpassed analyst estimates.
The stock hit an annual high of $162.35 on Wednesday, and later slipped to $157.40. The decline continued in premarket trading Thursday, as shares lost $1.05 to $156.35.
Stifel Nicolaus analyst R. Thaddeus Vayda downgraded the stock to "Hold" from "Buy," saying a potential rate increase is balanced by the risk of cost increases and delays.
Deutsche Bank analyst Mike Urban also sounded a cautious note on the stock, keeping a "Sell" rating and a price target of $120 per share. That implies the stock price will fall 23.8 percent over the next year.
Urban said the GlobalSantaFe buyout roughly doubled Transocean's dealings in the shallow-water drilling market, where prices are coming under pressure because more rigs are being built. Investors are overlooking the risks of that part of the business, he said.
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