SDRL Should I Buy
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Not a good buy right now. While the chart structure is still broadly bullish (short/medium/long MAs aligned) and today’s $114M Equinor Brasil extension is a real backlog catalyst, the setup lacks a strong timing signal (no Intellectia AI Stock Picker or SwingMax trigger), momentum is cooling (MACD histogram positive but contracting), hedge funds are actively reducing exposure, and the latest quarter shows weakening profitability (net loss and margin compression). For an impatient buyer who doesn’t want to wait for a cleaner entry, SDRL is better treated as a HOLD rather than a fresh BUY at ~$37.6.
Trend: Bullish bias but near-term momentum is fading. Moving averages are positive (SMA_5 > SMA_20 > SMA_200), supporting an uptrend structure. RSI(6) ~54 is neutral (no clear overbought/oversold edge). MACD histogram is above zero (0.104) but positively contracting, implying upside momentum is slowing rather than accelerating. Key levels: Pivot ~37.26 is immediate support area (price ~37.61 is only slightly above it). Next resistance is R1 ~39.63 (near-term upside target if buyers step in). If pivot fails, S1 ~34.89 becomes the next notable downside level; above R1, R2 ~41.10 is the next extension. Net: technically ‘okay’ but not a high-conviction entry today given cooling momentum and price sitting close to pivot support.
Event-driven: One-year contract extension/renewal with Equinor Brasil for the West Saturn drillship adds ~$114M backlog and extends work through Oct 2027, improving revenue visibility.
Technical structure: Bullish moving-average alignment (SMA_5 > SMA_20 > SMA_
supports the broader uptrend.
Analyst support: BTIG recently raised its price target to $40 and reiterated Buy, citing improving floater activity later in the year.
Smart-money flow: Hedge Funds are selling, with selling amount up ~239.59% over the last quarter (notable bearish signal for near-term demand).
Fundamentals: Latest reported quarter shows profitability deterioration (net income and EPS negative; gross margin down sharply YoY).
Momentum: MACD is still positive but contracting, consistent with a slowing advance.
Macro/industry risk in sentiment: Citi downgraded to Neutral, warning of rate softness/contract reset risk (notably Brazil) as the market books 2027 time during
Event risk ahead: Earnings on 2026-02-25 (after hours) can reprice the stock quickly; current elevated IV reflects this uncertainty.
Latest quarter: 2025/Q3. Revenue grew to ~$352M (+5.39% YoY), showing top-line improvement. However, profitability worsened: Net income fell to about -$11M (-134.38% YoY), EPS to -$0.18 (-138.30% YoY), and gross margin dropped to ~15.34% (-31.70% YoY). Takeaway: growth exists, but margin/earnings quality is trending in the wrong direction, which limits ‘buy now’ conviction despite backlog wins.
Recent trend is mixed and somewhat split: (1) Citi (2025-12-11) downgraded to Neutral with PT cut to $35 from $42, citing risk of softer dayrates/contract resets (a clear bearish/pro-caution stance). (2) Barclays (2025-11-10) kept Equal Weight and trimmed PT to $32, signaling limited upside conviction post-Q3. (3) SEB upgraded to Buy with a $34 PT (more constructive). (4) BTIG (2026-01-09) reaffirmed Buy and raised PT to $40, citing activity poised to increase later this year. Wall Street pros/cons view: Bulls focus on backlog visibility and improving activity later in 2026; bears focus on valuation being fair, potential rate softness (especially Brazil), and weaker profitability trends.
