Zacks Investment Research upgraded shares of Rowan Companies Plc (RDC) from UNDERPERFORM to NEUTRAL on April 16, 2014, with a target price of $32.00.
Ahead of the first quarter 2014 earnings results, we are upgrading our recommendation on Rowan Companies plc. to Neutral from Underperform. The company's stable backlog provides ample visibility into its future prospects. Also strengthening crude oil prices has improved the outlook for drillers such as Rowan Companies. While the company's international jackups enjoy strong market conditions, we believe that pricing will be under modest pressure this year as new jackups begin to enter the market. However, we remain concerned about contract drilling expenses which are expected to increase by 5% to 7% in 2014. Rowan also expects 2014 operating costs to rise by 10% to 11% from 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.
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