Canaccord Genuity Maintains a 'Hold' on Diamond Offshore (DO); Additional Insight on Rebuild

Canaccord Genuity maintains a 'Hold' on Diamond Offshore (NYSE: DO) price target of $66.00.

Canaccord analyst, Scott Burk, said, "We are reducing 12/13E EPS for the Voyager rebuild, but expect 2014 upside. Additional capex needed to renew Diamond's fleet could lead to a lower dividend in the near term and lower valuation...Likely long--term revenue/EPS improvement. The rebuilt Onyx could earn $350-375k/day based on recent rates (compared to our assumed $175k/day for the Voyager) and opex of $70-90k/day, implying higher return than building a newbuild for $600+M."

"Possible limits. The rebuilt rig’s five-ram BOP complies with all current GOM regulations, but compares unfavorably with seven ram BOPs on UDW newbuilds."

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 $56.81 yesterday.

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