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Why Seadrill Ltd's Shares Surged 13% Higher Today

By Travis Hoium - May 5, 2015 at 12:29PM

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Higher oil prices and a bullish analyst note have helped this offshore driller today.

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 driller Seadrill Ltd (SDRL) jumped as much as 13% after rising oil prices and an analyst note boosted the stock.

So what: The huge surge in oil prices today has been a big catalyst for Seadrill. The price of WTI crude has surged 3.3% to $60.90 per barrel today and Brent crude is up 2.5% to $68.10 per barrel.  

Analysts at Zephirin Group also came out with an analyst note yesterday that made Seadrill their top pick and put a $24 price target on the stock. That's much more bullish than most analysts have been recently, but for today it has been the right call.  

Now what: A single day's move in oil markets certainly doesn't make for a reason to buy or sell any stock in the energy space. But it does look like oil markets have started to stabilize; coming off lows of around $46 per barrel.

I think Seadrill is one of the best ways to play the potential rise in oil because it has a strong backlog and one of the newest fleets in the industry, meaning revenue should keep them afloat for the foreseeable future. Once drilling contracts begin to pick up again Seadrill should be in the perfect position to capitalize.

 

Travis Hoium owns shares of Seadrill. The Motley Fool recommends Seadrill. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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