Seadrill (Buy, TP: USD45.00) - Patience remains key
Having secured extensions for two of three Petrobras rollovers, Seadrill’s earnings visibility for its high-spec deepwater rigs is building nicely for 2027. At the same time, uncertainty remains for its tier-2 deepwater rigs, and the negative estimate revision trend is set to continue, as we are 13% (2025e) and c20% (2026–2027e) below consensus on EBITDA. Still, it is one of the few offshore drillers with decent YOY EBITDA growth and is trading at decent cash flow yield metrics and attractive multiples in the outyears. Furthermore, the contribution of tier-2 rigs is limited in our asset valuation, with c30% upside potential, even in a scenario where we assign zero value to these rigs. We reiterate our BUY, but have cut our target price to USD45 (49).
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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