Morgan Stanley on Drillers

Diamond Offshore raised at Morgan Stanley as floater availability has peaked • 11:27 AM

  • Diamond Offshore (DO +1%) is upgraded to Equal Weight from Underweight with a $57 price target, up from $47.50, at Morgan Stanley, which says earnings risk has largely played out and shares have an attractive yield.
  • The cycle is turning and floater availability has peaked, the firm believes, expecting trading to be driven increasingly by the reduction of floater availability through a pickup in fixtures rather than the confirmation of negative data points on dayrates.
  • Stanley sees negative sentiment on the offshore drillers group reversing to the extent that ballooning floater availability is absorbed from upcoming contract announcements.
  • Also: ATW +1.4%HERO +1%NE +0.8%ESV +0.8%RDC +0.5%RIG +0.4%.
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