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Jefferies Lowers Expectations on Diamond Offshore, Ensco, Noble, Rowan, Transocean

Many investors and analysts alike have been fighting over what is a good entry point for long-term energy investors. Even the top stocks are down from their 52-week highs, but many of these primary and secondary companies in the oil and gas services and equipment have seen their shares go back down to multi-year lows.

Jefferies has decided to take a mixed view on its oil services and equipment stocks, and in offshore drilling the firm believes the industry is suffering from too many short-term jobs without enough stacking. The firm maintained its Buy and Hold ratings on the companies followed in this segment, but the one common theme is lower price targets and lower earnings expectations.

Despite outpacing expectations so far in 2017, Jefferies thinks well-drilling activity will fall in the second half of 2017. Still, the firm did note that contracting is unlikely to grind to a halt and Jefferies sees some high-profile jobs moving along. Eduardo Royes and Brad Handler of Jefferies said in their report:

The big overhang remains a path to pricing power. Supply reductions—both in the aggregate and as it relates to the marketed...