DO - Diamond Offshore Drilling: Investors Should Look Beyond Recent Rig Incident Impact - Buy

2024-04-09 09:43:23 ET

Summary

• Diamond Offshore Drilling reported better-than-expected Q4/2023 results and guided Q1 and FY2024 roughly in line with muted expectations.
• However, the recent Ocean GreatWhite incident is likely to result in the company falling short of its projections.
• On a more positive note, the company managed to secure long-term contract extensions for two drillships in the U.S. Gulf of Mexico at decent terms.
• Investors should look beyond mediocre near-term prospects and rather focus on the earnings inflection widely expected for next year and beyond.
• While I have lowered my estimates for this year, I have increased my Adjusted EBITDA projections for 2025 and 2026. Reiterating "Buy" and increasing the price target from $18 to $19.

Note:

I have previously covered Diamond Offshore Drilling, Inc. ( DO ), so investors should view this as an update to my earlier articles on the company. ...

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