Zacks Investment Research downgraded shares of Rowan Companies Plc (RDC) from NEUTRAL to UNDERPERFORM on December 19, 2013, with a target price of $31.00.
We are downgrading our long-term recommendation on Rowan Companies plc to Underperform from Neutral. The volatility in the macro backdrop, along with operational hindrances that could put pressure on the company's performance in the upcoming quarters also raises concerns. Further, the company expects its contract drilling expenses to increase by 5% to 7% in 2013. Rowan has also forecasted 2014 operating costs to rise by 10% to 11% from the 2013 levels. The increase in operating cost is mainly due to the escalating costs in Norway and a 6-8% expected increase in labor rates. As such, we see a restricted upside potential for Rowan's shares and expect the company to under perform versus the industry.
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