Diamond Offshore May Be Undervalued

Several analysts that cover the stock have recently released reports

Diamond Offshore Drilling (NYSE:DO) is an offshore oil and gas-drilling company with assets around the globe. Diamond Offshore currently has 40 offshore drilling rigs consisting of five dynamically positioned drillships (with four more presently under construction), 7 jack-ups and 32 semisubmersibles.

Stock in the company is trading at around $64 per share and Sanford C. Bernstein analysts have just dropped their price objective on the shares from $74.00 to $64.00 on Friday, with a “market perform” rating on the stock. However, there is reason to believe the stock may be undervalued.

On September 4th Wunderlich analysts initiated coverage on the stock, with a $90.00 price target and a “buy” rating. Also on September 4th, JPMorgan Chase & Co. analysts raised their price target on Diamond to $78.00 from $75.00. The analysts placed an “overweight” rating on the stock.

Lastly, Zacks analysts reiterated their $69.00 price target on the stock and a “neutral” rating on August 26. Of the thirty-three analysts that now cover the stock twenty-five investment analysts have issued a hold rating, six have given a buy rating to the company’s stock and two analysts have rated the stock with a sell rating. Diamond Offshore Drilling has a consensus price target of $74.36 and the consensus rating on the stock is a “Hold.”

In the past year the price of the stock has risen to as high as $76.85 and has dropped to as low as $63.05. On Thursday, July 25, Diamond Offshore Drilling issued its quarterly earnings data and beat the consensus earnings per share estimate of $1.24 by $0.09. For the quarter Diamond Offshore reported earnings per share of $1.33.

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