Seadrill Ltd (SDRL)

[MisterEC]

Seadrill: Expect Massive Downside In 2017

But, JF is a billionaire, he will bail us out

Summary

SDRL’s receding backlog and lower dayrates will lead to a strong erosion in both its revenue and earnings next year, leading to strong downside in the stock price.

The biggest headwind that SDRL faces is a decline in capital spending in the oil and gas industry, especially offshore drilling, which is leading to an oversupply and hurting dayrates.

Considering the expected decline in SDRL’s revenue next year, the stock could slide as much as 30% considering its price to sales ratio.

Since SDRL’s bottom line is expected to take a more severe hit, its stock will go down by around 80% given its average P/E ratio, giving investors a shorting opportunity.