UPDATE: J.P. Morgan Initiates Diamond Resorts International at Overweight, 'Diamond in the Rough'

In a report published on Tuesday, J.P. Morgan analyst Joseph Greff initiated coverage on

with an Overweight rating and a $20 price target. In the report, J.P. Morgan stated, "We are initiating coverage of DRII shares with an Overweight rating and a year- end 2014 price target of $20, implying 22% upside potential from here. Diamond Resorts International posses an attractive vacation ownership (or timeshare) business model and generates ~30% of its annual adjusted EBITDA from relatively predictable, high-margin management fees. We believe the company is poised to generate 7-9% EBITDA growth over the next several years and continue to improve its free cash flow performance. Trading at 7.2x 2013E EV/EBITDA vs. peers at 12.8x, we believe DRII shares are attractively valued." Diamond Resorts International closed on Monday at $16.43.