UPDATE: J.P. Morgan Reiterates Neutral Rating, Lowers PT on Diamond Offshore Drilling

In a report published Wednesday, J.P. Morgan & Co. reiterated its Neutral rating on Diamond Offshore Drilling (NYSE: DO), but slightly lowered its price target from $81.00 to $80.00.J.P. Morgan noted, “Although more heavily weighted toward deep-water, Diamond is perhaps best known as having the oldest fleet of drilling rigs and a generous special dividend. The company reduced its special dividend in the prior year as earnings declined, and it could be some time before the dividend is raised given higher near- and medium-term capital needs. Only five of Diamond's active deepwater rigs are dynamically positioned, an increasingly important criterion for operators, and the company has a large supply of older midwater and deepwater rigs. Aside from fleet quality, the stock appears fully valued on virtually every metric, in our opinion. While an argument can be made to own the low-quality assets for the operating leverage as the market recovers, so much deepwater capacity has been/is being built that we don't see the midwater segment recovering meaningfully. Furthermore, Diamond has only five of seven jackups contracted and is highly leveraged to just one customer – against the industry trend for newer more capable rigs.”Diamond Offshore Drilling closed on Tuesday at $69.07.