Maersk Drilling (Buy, TP: DKK200.00) - From cash-return story to likely covenant breach
After a series of contract terminations, updated guidance and revised dayrate forecasts, we have once again cut our forecasts. Our 2021 and 2022 EBITDA forecasts are now 23% and 62% below consensus, suggesting a likely breach of its (undisclosed) leverage covenants. Near-term, the equity story looks set to be impacted by a very weak drilling market, negative estimate revisions, and industry-wide restructuring. Long-term, we see it as one of few survivors, and its North Sea exposure should provide some resilience, hence we reiterate our BUY, with a new target price of DKK200 (250).
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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