PGS (Sell, TP: NOK5.00) - Setback increases uncertainty
Despite a poor sector-wide performance in Q1 after the macro noise in March and corresponding oil price drop, it is hard to overlook that PGS’ Q1 late-sales more than halved versus last year and were among the weakest on record. Bearing in mind that the equity case and liquidity runway are heavily dependent on strong late-sales (and free cash flow), we view the Q1 revenue update as a setback for the investment case, intensifying balance sheet uncertainty. In our view, this should increasingly raise the question whether PGS can cover its debt maturities in March next year without injecting new capital. We reiterate our SELL and NOK5 target price.Petroleum Geo-Services is engaged in providing geophysical services and oil and gas production services. As of Dec. 31, 2001, Co. operated six Ramform design vessels in its marine seismic data acquisition operations.
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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