Equinor (Hold, TP: NOK280.00) - In need of discipline reassurance
Equinor is trading at a record-low premium to its peer group on 2-year forward P/E, raising the question of whether the stock has bottomed out after February’s Capital Markets Update (CMU). Depending on the metric used and value assigned to renewables, we calculate a fair value of NOK200–375 for Equinor. The top end is our bull-case fair value, which we believe hinges on investors being reassured the group will stick with its value-over-volume strategy on renewables, and near-term datapoints (Sørlige Nordsjø II auction and Empire Wind farmdown) could provide insight. We reiterate our HOLD but have cut our target price to NOK280 (300) on our lower estimates.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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