Dahlman Rose Reiterates Buy Rating on Atwood Oceanics (ATW)

Dahlman Rose is out with a research report this morning, where it reiterates its Buy rating on Atwood Oceanics ATW; it has a $40.00 price target on the stock. The Dahlman analysts cited the company’s recent earnings report, which was below estimates. The company generated $85.3 million of operating earnings due to a higher number of rigs in operation during this quarter. The analysts also noted that Atwood’s lack of Gulf of Mexico exposure (they have just one rig there) gives the company more visibility. As for valuation, they remarked, “While we believe offshore drilling companies with higher-end fleets will outperform in the coming months, the valuation of ATW shares remains compelling, particularly as it trades at 1.0x NAV, while other companies with an equally deepwater-heavy profile have traditionally traded at premiums. Our $40 target is based on 8.0x 2011 EBITDA.”