Seadrill raised to Buy at Citi as top-rated offshore driller; Transocean cut

Seadrill (SDRL) +2.8% in Thursday’s trading as Citi upgrades shares to Buy from Neutral with a $52 price target, rating it as the preferred name among offshore drillers, forecasting a sector-best free cash flow yield in 2026 of greater than 20%.

Citi analyst Scott Gruber also points to Seadrill’s (SDRL) superior takeout potential, with Transocean (NYSE:RIG) mentioned as a potential suitor, and confidence that Seadrill will renew its Brazilian rigs at “solid” rates.

Next, Gruber prefers Noble Corp. (NE) on the possibility that buybacks could ramp up with the closing of the Diamond Offshore acquisition, estimating FY 2026 revenues of $4.3B, EBITDA of $1.88B and FCF of $1.14B, followed by Valaris (VAL), which has the highest quality spare capacity.

For its part, Citi downgrades Transocean (RIG) to Neutral from Buy with a $4.50 PT, saying the company has the greatest backlog coverage and thus the least amount of revision risk on updated estimates, but shares trade at a premium to the bank’s more conservative forecasts while buybacks are “not on the horizon.”