TGS (Buy, TP: NOK110.00) - Exposed to spending cuts
We maintain our positive view on TGS; however, we have cut our 2025–2026e FCF by 20%, as we believe oil companies’ capex cuts could have a meaningful impact on seismic spending and TGS’s revenues. That said, near-term FCF should be supported by self-help elements from the PGS merger, and we find decent valuation support, with the stock trading at a ~15% FCF yield and ~9% dividend yield on 2025e. We reiterate our BUY, but have cut our target price to NOK110 (140).TGS Nopec Geophysical provides geoscience data to oil and gas exploration and production companies worldwide. In addition to global geophysical and geological data libraries that include seismic data, magnetic and gravity data, digital well logs, production data and directional surveys, Co. also provides advanced processing and imaging services, interpretation products, permanent reservoir monitoring and data integration solutions.
DNB Markets is the investment banking arm of DNB Bank ASA and is focused primarily on the Nordic region, as well as internationally on niches such as global shipping, energy and related services, and seafood. DNB Markets offers services in FICC, Equities and Investment Banking advisory from offices in Oslo, Stockholm, London, Singapore and New York. Equity research coverage is offered on c250 Nordic companies. DNB was ranked no.2 in Extel Nordic Research 2017. The DNB Markets’ Credit and FICC Macro & FX Research teams are repeatedly highly rated by Prospera Nordic Institutional Investor Surveys.
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