Citi downgraded Helmerich & Payne to Neutral from Buy with a price target of $19, down from $25. The response by public exploration and production companies to the pullback in crude prices has been more pronounced than originally anticipated, the analyst tells investors in a research note. The firm tallies 18 rigs being cut across public operators. Citi also senses greater desire by E&P companies to push for rate concessions for higher spec drilling and frac equipment, given that tubular costs likely rise, and sand is unlikely to deflate much further. While the stocks are down, reductions in rates of 5%-10% “greatly compresses” free cash flow, Citi contends. Thus, it downgraded Patterson-UTI (PTEN) and Helmerich & Payne (HP) pending clarity on where rates land this downcycle.
Don’t Miss TipRanks’ Half-Year Sale
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
- Make smarter investment decisions with TipRanks' Smart Investor Picks, delivered to your inbox every week.
Published first on TheFly – the ultimate source for real-time, market-moving breaking financial news. Try Now>>
Read More on HP:
- Helmerich & Payne downgraded to Neutral from Buy at Citi
- Helmerich & Payne retains Eastdil Secured to explore Utica Square options
- Helmerich & Payne files automatic mixed securities shelf
- Helmerich & Payne Completes Acquisition of KCA Deutag
- Helmerich & Payne price target lowered to $20 from $24 at Barclays