Seadrill (Buy, TP: NOK600.00) - Leapfrog 2024
It has become ever clearer over the past few months that 2024 is lining up to be a transition year for Seadrill, with several of its rigs likely to reposition for new contracts. Despite recently coming down by 15%, we are still 17% below consensus on 2024e EBITDA, explained by our conservative view on open capacity. However, we see investor focus shifting to 2025–2026 as Seadrill looks well placed to build earnings visibility and could benefit from new contracts on its three low-dayrate rigs with Petrobras. We consider Seadrill the most attractively valued large-cap offshore driller in our coverage, trading at a 2026e EV/EBITDA of 2.4x, and we believe the stock has now bottomed out, with a weak 2024e largely priced in. We reiterate our BUY and NOK600 target price.
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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