Diamond Offshore Drilling Inc (DO)

[Bart Myers]

Duncan Williams downgraded Diamond Offshore (NYSE: DO) to Reduce from Buy. Diamond Offshore is currently benefiting from strong demand for deepwater drilling worldwide. Record earnings in 2009 of $9.43 per share were followed in 2010 with earnings of $6.70 per share. Earnings for 2011 and 2012 are expected to be flat with 2010 estimated earnings at $6.60 per share and $6.55 per share, respectively, due to the impact of declining jackup and mid-water rates.

Should commodity prices fall dramatically from current levels, our estimates for rig utilization and dayrates may be too high, thereby causing lower earnings and higher costs. Should Diamond have one or two rigs stacked and unable to work, Duncan Williams' earnings estimates and targets may not be reached. Political events in the worldwide market could also have an adverse impact on estimates.

Duncan Williams is downgrading Diamond Offshore to REDUCE from BUY based on valuation. Diamond is presently trading at a 19 premium to the group for 2012 on a P/E basis and a 32 percent premium on a P/CF basis.


Source: http://www.benzinga.com/analyst-ratings/analyst-color/11/03/956143/update-duncan-williams-downgrades-diamond-offshore-to-red#ixzz1Hu2E0tte