Monday, FBR Capital Markets upgraded Ensco International Inc. (ESV) shares to Outperform from Market Perform and increased its price target to $49 from $36. The brokerage raised its 2010 EPS estimate to $4.55 from $4.40, and its 2011 estimate to $5.85 from $4.85, while lowering its 2009 estimate to $5.51 from $5.52.
The brokerage also upgraded Rowan Companies Inc. (RDC) shares to Market Perform from Underperform and increased its price target to $20 from $14. The brokerage raised its 2009 EPS estimate to $3.05 from $3.00.
Analyst Robert MacKenzie said that a sharp increase in jackup tender activity suggests that the market is nearing a bottom. The analyst expects utilization in the global jackup fleet to stabilize toward the end of the year as there are increased customer inquiries for jackup work.
The analyst noted that the deepwater market has shown evidence of firming, as well. The recent contract for the Cajun Express highlights the strength of the high-end deepwater market, and the analyst is consequently increasing his rate forecasts for these rigs by $75,000/day.
The analyst believes Ensco will realize the most benefit from stabilization in the jackup market. The company has a significant amount of stacked jackups, as well as many slated to roll off contract by the end of the year.
Although the analyst expects Ensco's cash flow to fall in the coming quarters as these rigs idle, the potential for new contracts in the early part of next year should bolster investor sentiment and provide support for the stock.
The analyst said that Rowan's jackup fleet is largely high end, which has helped to maintain relatively higher rates of utilization than some peers. The increase in jackup activity and stabilization in the market bode well for Rowan, and thus the analyst is upgrading to Market Perform.
The analyst does not, however, expect any significant day rate appreciation for the higher-end rigs. Furthermore, weakness in the manufacturing division, as well as low utilization for Rowan's land drilling fleet, will likely continue to weigh heavily on the stock.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.