Diamond Offshore Drilling: 4Q Analyst Estimates, Recommendations

Of the 32 analysts covering Diamond Offshore Drilling (DO), only 9% recommend a “buy” or equivalent for the stock. Among the top offshore drilling stocks (XLE), Diamond Offshore Drilling has the lowest percentage of “buy” recommendations. About 47% have rated the stock a “hold.”

The remaining 44% have recommended a “sell” for DO stock. Its consensus 12-month target price of $14.58 implies a downside of 23.2%, based on its current market price of $19 on January 24, 2018.

About 30% of analysts recommend a “buy” for Rowan Companies (RDC). For Ensco (ESV) and Transocean (RIG), 47% and 18% of analysts, respectively, have given “buy” recommendations.

Diamond Offshore Drilling is set to release its fourth quarter results on February 12, 2018. Analysts estimate its revenue to be $333 million, a 9% fall from the previous quarter’s revenue of $366 million. The estimated revenue is 15% lower than 4Q16 revenue of $391 million.

Analysts estimate a 4Q17 fall in revenue on the one hand and a rise in drilling costs on the other. The combined effect of this is a steep fall in estimated 4Q17 EBITDA (earnings before interest, tax, depreciation, and amortization). Analysts estimate DO’s 4Q17 EBITDA to be $106 million, which is 25% below the previous quarter’s EBITDA of $141 million. Estimated EBITDA is 31% lower year-over-year.

In the next part of this series, we’ll take a look at analysts’ recommendations and estimates for Transocean.