We upgrade our recommendation to Outperform for DryShips Inc. (DRYS) following its excellent third quarter of 2010 financial results, which were far ahead of Zacks Consensus Estimates.
The company’s strategy to put vessels under long-term charters during the quarter to avoid volatility in the spot-market paid-off nicely, resulting in soaring net earnings. DryShips is steadily transforming itself as a drillship company from a drybulk cargo operator. As a result, both the top-line and bottom-line are benefiting from lucrative ultra deep-water oil drilling industry.
The company announced that the rates for ultra deepwater rigs have bottomed out in the third quarter of 2010. After that the scenario becomes more favorable and demand for drilling rig may surpass supply in 2011. Recently, the company received its first drillship contract for the four newbuilds. This contract will enable DryShips to get loan to take delivery of two drilling vessels it has ordered.
DRYSHIPS INC (DRYS): Free Stock Analysis Report
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