UPDATE: Goldman Sachs Upgrades Diamond Offshore (DO) to Neutral

(Updated - March 11, 2016 9:16 AM EST)

Goldman Sachs upgraded Diamond Offshore (NYSE: DO) from Sell to Neutral with a price target of $24.00 (from $18.00). Analyst Waqar Syed pointed out its better liquidity position relative to other offshore drillers and decent contract coverage.

"At our current 12-month target prices, we now see more downside for ATW (-46%) and NE (-46%) versus DO’s implied upside of 13%. The primary drivers of our upgrade are: (1) DO has already taken EBITDA reductions as many of its rigs have rolled over. Within the offshore drilling group, we now expect the least deterioration in EBITDA for DO through 2018 given relatively better contract coverage. (2) DO has better liquidity and balance sheet than many of its peers. (3) DO has 7 rigs under contract through 2018. Indexing offshore driller rigs under contract to 100 in 2018, we note that DO has the highest contract coverage at 44 vs. an average of 33 (refer to Exhibit 27). However, we upgrade to Neutral rather than Buy as offshore drilling companies are still faced with industry headwinds from soft demand and over supply dynamics," said Syed.

For an analyst ratings summary and ratings history on Diamond Offshore click here. For more ratings news on Diamond Offshore click here.

Shares of Diamond Offshore closed at $21.83 yesterday.

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