Seadrill (Buy, TP: USD20.00) - A fresh start
The Q3 report (due on 27 November) will be the first proper quarterly report since Q2 2017. Due to the impact of fresh start accounting and potential restructuring-related costs, we see significant uncertainty in terms of our estimates and consensus. We forecast Q3 EBITDA of USD47m, below consensus of USD52m. We maintain our view that Seadrill is a highly leveraged option on a rig market recovery, with higher debt and a shorter liquidity runway than most peers. Still, after the recent sell-off, we see upside potential to our NAV of USD19.9/share, and maintain our BUY with a USD20 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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