UPDATE: Deutsche Bank Lowers PT on Diamond Offshore Drilling on Q4 Guidance
In a report published Wednesday, Deutsche Bank reiterated its Hold rating on Diamond Offshore Drilling (NYSE: DO), but lowered its price target from $70.00 to $68.00.
Deutsche Bank noted, “Same story different day. DO's Q4 and guidance supported our view that industry cost pressures are beginning to accelerate even as downtime rises. The elevated downtime along with the impairment on a handful of rigs also raised concerns about long-term earnings power. Even with the upgrade of midwater rigs and the company's newbuild program, DO will need to invest significant capital to remain competitive. We maintain our HOLD rating as we see dayrates continuing to flatten even as costs rise. In addition, DO's significant cash payout (currently $3.50/sh combined regular + special dividend) will remain attractive for income investors but its sustainability is being called into question.”
Diamond Offshore Drilling closed on Tuesday at $73.58.
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