Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of offshore drilling rig owner Hercules Offshore, (NASDAQ:HERO.DL) fell 16% today after being downgraded by an analyst.

So what: An analyst at Global Hunter Securities downgraded the stock from a buy rating to a neutral rating, and reduced the price target from $12 to $6. The analyst pointed to disappointing contracts for Discovery rigs, and Gulf of Mexico dayrates have reduced the upside for a business that recovered nicely last year. 

Now what: The shallow water market, where Hercules Offshore is focused, is more up and down than in deeper water because it's quicker to drill wells, and there's more supply in the market. Competitor Noble recently pointed to weakness in new contracts, which would affect Hercules more than companies that contract rigs for years at a time. Downgrade or not, I don't like Hercules' position in the market, and would focus on ultra-deepwater, where margins are higher and there's more stability.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.