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Diamond Offshore Stock Best among Peers: What Analysts Say

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Stock performance

Due to the brutal industry downturn, all offshore drilling (OIH) stocks have taken a hit. All stocks in the industry gave negative returns in 2016. We are almost at the end of the third quarter of 2017, and drilling stocks still continue to deliver negative returns. As of September 13, 2017, Diamond Offshore Drilling (DO) has fallen 22.9% YTD (year-to-date). The stock fell 19.0% in 2016. Although the stock has delivered huge negative returns, it is still one of the best performers in the industry.

Noble (NE), Transocean (RIG), Ensco (ESV), and Seadrill (SDRL) have fallen YTD 34.7%, 37.7%, 47.7%, and 92.3%, respectively.

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Revisions

In August, many analysts revised the target prices for Diamond Offshore Drilling. RBC upgraded the stock to “sector perform” from “underperform.” Goldman Sachs reduced the target price to $11 from $14.50. Barclays reduced the target price to $14. Evercore cut the target price to $18 from $20. JPMorgan maintained a “neutral” rating on DO and reduced the target price to $16 from $18.

Analyst recommendations

The consensus rating for Diamond Offshore is 3.1, which means a “hold.” Thirty-two analysts have given recommendations for Diamond Offshore. Of those, one analyst recommends a “strong buy,” and three recommend a “buy.” About 62.0% of them, or 20 analysts, have given it a “hold” rating. Seven analysts rate the company a “sell,” and one analyst rates it a “strong sell.”

The 12-month consensus target price for Diamond Offshore is $13. Compared to the current market price of $13.35 on September 14, 2017, the target price implies a potential downside of 2.6%.

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