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BMO Capital Upgrades Slate Of Offshore Drilling Stocks

John Seward

A slate of offshore drilling stocks were upgraded from Underperform to Market Perform Tuesday by BMO Capital, citing an improving balance of risks versus rewards.

BMO's Alan Laws said in a note that the "potential for a surprise demand uptick now outweighs already price-in risks of further weakening."

Laws said as the sector improves, companies will be increasingly differentiated, as opposed to being viewed as a single group.

Among the batch, Laws prefers Atwood Oceanics (NYSE: ATW) and Ensco (NYSE: ESV).

"While other subsectors in Oil Services remain more attractive today, we believe value and contrarian investors should start kicking tires," said Laws.

Ensco traded recently at $54.70, up 1.15 percent; Atwood gained 2.15 percent to $50.93.

Others upgraded include: Transocean (NYSE: RIG) up 0.74 percent to $43.70; Seadrill (NYSE: SDRL) up 0.5 percent to $38.45; Diamond Offshore (NYSE: DO) up 1.6 percent to $49.33 and Rowan Companies (NYSE: RDC) up 1.1 percent at $31.74.

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