UPDATE: Citigroup Raises PT On Diamond Offshore Drilling To $90

Citigroup has published a research report on Diamond Offshore Drilling (NYSE: DO) as GOM delays continue causing Citi to lower estimates for 2011.

In the report, Citigroup writes "DO reported incremental gains in today's fleet status report with short-term rig assignments in the GOM, Mexico, and Suez Gulf. However, we have lowered our EPS estimates primarily because the Ocean Monarch, an ultra-deepwater rig contracted to Anadarko Petroleum, remains off day rate, and we now expect it will not recognize any revenues in 1Q11 and 2Q11. Although our near-term estimates have been lowered, the GOM permitting problem is a short-term issue, in our view. Ultimately, we expect up to 20 deepwater rigs out of 35 in the GOM to receive drilling permits by 3Q11. We consider it more relevant to the stock's valuation that our EPS estimates are substantially above consensus in 2012 and 2013."

Citigroup maintains its Buy rating and has raised the price target from $86 to $90.

Diamond Offshore Drilling closed yesterday at $74.39.