Zacks Analyst Blog Highlights: Opsware, Diamond Offshore and Transocean

Business Wire, Dec 1, 2006

CHICAGO -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Opsware (Nasdaq: OPSW), Diamond Offshore (NYSE: DO) and Transocean (NYSE: RIG).

See the latest posts to the Analyst Blog by visiting: http://at.zacks.com/?id=2673

Here are highlights from Thursday's Analyst Blog:

$21 Target on Opsware

Opsware (Nasdaq: OPSW) is a leader in the data center management space, and with its rapid growth will be the market share leader during fiscal 2007. We believe that market Opsware addresses is currently over $1 billion, and growing as the trend towards numerous inexpensive servers causes management challenges. We therefore maintain a Buy rating on shares of Opsware with a $21.00 price target.

Keep Diamond a Buy

Our continued Buy recommendation for Diamond Offshore (NYSE: DO) shares reflects the company's strong leverage to the current cycle and its industry leading position (next to Transocean {NYSE: RIG}) in the deepwater drilling market. Diamond's current strong backlog position has improved its earnings visibility substantially.

We expect the day-rate and margin expansion to continue, but at a decelerated pace. We have reduced our earnings estimates to reflect a deceleration in day-rate growth, particularly in the GoM jack-up market. Our new 2006 and 2007 EPS estimates are $5.04 and $9.15, down from $5.82 and $9.31, respectively.

Brazil Cuts Interest Rates

Yesterday evening the Brazilian Central Bank announced another cut in local interest rates. The cut was again 50 basis points, and the new rate is now 13.25% per year. The Brazilian Central Bank started to cut the rate in September 2005 when interest in Brazil was as high as 19.75% per year (p.y.).

It was a long way down indeed, and I still believe there is more room for cuts in the following months, since 2006 inflation will be in the 3.0% to 3.2% range, and the official target is as high as 4.5%. Also important to remember is that real interest rates in Brazil remain above 10% p.y., the highest in the world. However, yesterday's decision was not unanimous - among the 8 members of the committee, 5 voted for a 50 basis-point cut and 3 voted for a 25 basis-point cut. I believe that in the following meetings, the cut will be reduced to 25 basis points.

See the latest posts to the Analyst Blog by visiting http://at.zacks.com/?id=2645

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