Equinor (Hold, TP: NOK125.00) - The cash flow that never came
We have cut our 2020e EPS by 67% and 2021e by 36%, but raised 2022e by 7%. On our new assumptions we forecast 2020 FCF of NOK4.7/share and we see a high risk of buyback cuts. Our new NOK125 (175) target price implies a 2021e P/E of 12.7x. As this assumes Brent at USD56/bbl, we believe a multiple more in line with historical averages is fair and reiterate our HOLD.Equinor is engaged in oil and gas exploration and production activities. Co. is primarily focused on exploration, development and production of oil and gas on the Norwegian continental shelf (NCS). Co.'s operations are organized into four segments. The Development and Production Norway and Development and Production International segments explore, develop, produce and extract crude oil, natural gas and natural gas liquids. The Marketing, Processing and Renewable Energy segment markets, trades, transports and processes oil and natural gas and renewable energy. The Other segment consists of global well and project delivery, research and develpoment, and business development.
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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