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Transocean (RIG) Soars 13.5%: Is Further Upside Left in the Stock?

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Transocean (RIG - Free Report) shares soared 13.5% in the last trading session to close at $5.03. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 31.8% gain over the past four weeks.

Transocean shares rallied on the last trading day driven by optimism over crude prices spurred by a supportive macro backdrop, geopolitical tensions and the OPEC+ supply curtailments. The steady increase in oil prices to more than $100 a barrel has lifted the offshore drilling space and prompted research firm Pareto Securities to upgrade its rating on Transocean to Hold from Sell.

This offshore oil and gas drilling contractor is expected to post quarterly loss of $0.21 per share in its upcoming report, which represents a year-over-year change of -10.5%. Revenues are expected to be $613.71 million, down 6% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Transocean, the consensus EPS estimate for the quarter has been revised 15.3% lower over the last 30 days to the current level. And a negative trend in earnings estimate revisions doesn't usually translate into price appreciation. So, make sure to keep an eye on RIG going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Transocean belongs to the Zacks Oil and Gas - Drilling industry. Another stock from the same industry, Helmerich & Payne (HP - Free Report) , closed the last trading session 6.9% higher at $44.26. Over the past month, HP has returned 23%.

Helmerich & Payne's consensus EPS estimate for the upcoming report has remained unchanged over the past month at -$0.30. Compared to the company's year-ago EPS, this represents a change of +50%. Helmerich & Payne currently boasts a Zacks Rank of #2 (Buy).


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