Tuesday, January 25, 2011

Diamond Offshore (NYSE:DO) Still Weighed Down by Gulf

Diamond Offshore (NYSE:DO) continues to be weighed down by the Gulf of Mexico, says Barclays (NYSE:BCS), along with the ongoing challenges of the midwater market.

Barclays noted, "DO's outlook continues to be hampered by its exposure to the Gulf of Mexico and the challenging midwater market. We do not anticipate activity to pick up meaningfully in the GOM until the second half of the year due to permitting delays, while the midwater market is likely to remain depressed as operators continue to show a preference for newer, high-spec equipment. Given its lower dividend yield, exposure to the midwater market, and the stock's valuation, we continue to rate the shares at EW...We are lowering our 4Q10, 2011 and 2012 EPS estimates to $1.46 (from $1.54), $6.15 (from $6.40) and $5.50 (from $6.15), respectively, to reflect a slow permitting process in the GOM and a challenging demand environment in the midwater market."

Barclays maintains an "Equalweight" rating on Diamond Offshore (DO), which closed Monday at $72.38, down $0.99, or 1.35 percent. Barclays lowered their price target on Diamond Offshore from $69 to $63.

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