Credit Suisse Reiterates a Sell Rating on Helmerich & Payne

By Jason Carr

In a report released yesterday, James Wicklund from Credit Suisse reiterated a Sell rating on Helmerich & Payne (NYSE: HP), with a price target of $53. The company’s shares opened today at $67.53, close to its 52-week high of $70.39.

Wicklund said:

“We tweak our 2017/18 EBITDA estimates to $292M/$304M (from $281M/$293M). We maintain our Underperform rating and raise our PT to $53 (from $52). …but Moving in the Wrong Direction. In US land, while HP expects revenue days +20% q/q in F1Q17 (we model US horizontal rig count +17% q/q), it guided to an average daily margin -16% q/q ($9.3K from $11.1K) driven by (1) a higher mix of rigs on spot market vs. term contracts and (2) rigs moving to full operating mode from standby, which clearly carries a higher cost burden. Evidently the incremental dayrate is not sufficient to offset by incremental costs.”

According to TipRanks.com, Wicklund is a 4-star analyst with an average return of 4.5% and a 46.8% success rate. Wicklund covers the Basic Materials sector, focusing on stocks such as Oceaneering International, Oil States International, and Mammoth Energy Services.

Currently, the analyst consensus on Helmerich & Payne is Hold and the average price target is $63.40, representing a -6.1% downside.

In a report issued on November 15, Jefferies also reiterated a Sell rating on the stock.

Based on Helmerich & Payne’s latest earnings report for the quarter ending September 30, the company posted quarterly revenue of $332 million and GAAP net loss of $72.84 million. In comparison, last year the company earned revenue of $566 million and had a GAAP net loss of $20.62 million.

Based on the recent corporate insider activity of 32 insiders, corporate insider sentiment is negative on the stock. Last month, John Lindsay, the President & CEO of HP sold 15,000 shares for a total of $1,011,750.

Helmerich & Payne, Inc. engages in contract drilling of oil and gas well. It operates through the following segments: U.S. Land, Offshore, and International Land. The U.S. Land segment operations drilled primarily in Oklahoma, California, Texas, Wyoming, Colorado, Louisiana, Mississippi, Pennsylvania, Ohio, Utah, New Mexico, Montana, North Dakota, West Virginia and Nevada. The Offshore segment operates in the Gulf of Mexico and Equatorial Guinea. The International Land segment operates in seven international locations: Ecuador, Colombia, Argentina, Tunisia, Bahrain, United Arab Emirates, and Mozambique. The company was founded by Walter Helmerich II and William Payne in 1920 and is headquartered in Tulsa, OK.