UPDATE: Dahlman Rose Initiates Pacific Drilling SA at Buy on Undervalued Fleet

Dahlman Rose initiated coverage on Pacific Drilling SA

with a Buy rating and a $12.50 price target. Dahlman Rose said, "PACD is a pure-play UDW driller with one of the youngest and most capable fleets in the world. The fleet currently consists of four nearly identical UDW drillships delivered in 2011 and 2012, plus three additional sister drillships currently under construction, with deliveries expected between 2Q13 and 2Q14. PACD's rigs are valued by the market at $737 million per rig; we think that the value of an on-the-water newbuild is at least $800 million, given the lead time for construction and intervening cash flow." Pacific Drilling closed at $9.71 on Wednesday.