Financial Management Term Paper

Jason Doyle

Professor Drissi

Bus 320

Term Project

7 Apr 2011

Diamond Offshore Drilling, Inc.

Stock Symbol: DO

Comparing the analyst views of the company versus the CEO’s view of how the company will perform over the next fiscal year vary significantly. Of course the role of the CEO of Diamond Offshore (DO) is to increase stockholders equity in the company, so the CEO is going to use the best sales strategy about the company. Hence causing the interest in the stock price to go up, thus increasing the stockholder’s equity in the company. On the other hand, the analyst’s forward-looking prognosis of the company is going to be free of the obvious biases that the CEO of the company will have. As a result, in order to gain useful insight into the future success or failure of DO’s share price, one will have to read between the lines of both sets of information. Obviously, there are many other factors that will affect the share price that cannot be forecast by either party. One has to rely on all the available information about the company in order to make an informed decision to invest their hard earned money into this enterprise. While both reports provide essential insight to the future of the company, it is imperative that potential investors not take either opinion at face value. Upon review of the analyst’s information from Yahoo Finance, it was shown that the majority of the analysts have a reserved view of the company going forward. The majority of the analyst that cover DO recommend a hold position and the remainder either recommend buying or selling the stock. One will have to dig a little deeper to find out which analyst are doing the recommendations and then one can determine which analyst has a better track record of being accurate with their stock recommendations. Furthermore, these recommendations only consist of buying, holding, or selling the security, they fail to provide the reasoning behind their rationale. Overall, the coverage...