NEW YORK (AP) -- Jefferies & Co. downgraded Transocean on Friday, saying that the company needs to focus more on growth.
Analyst Brad Handler believes the oilfield services company has come a long way from an operational standpoint, but that it has now reached a crossroads.
Transocean owned the Deepwater Horizon drilling rig which exploded and sank in the Gulf of Mexico in 2010. The company recently reached an agreement with the Justice Department over its role in the massive oil spill.
With the disaster now largely behind it, Handler said the company could chose to accept slower growth and aggressively return cash to shareholders. But he said shareholders would be better served over the long term if the company instead picked up its pace of growth, preferably through acquisitions.
Growth through the company's existing businesses could be slow and expensive, Handler said, and even put the industry's supply and demand balance at risk.
Jefferies lowered its rating on the company to "Hold" from "Buy."
Transocean, which has headquarters in Switzerland, saw shares fall 62 cents to $53.14 in premarket trading.
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