Subsea 7 (Hold, TP: NOK110.00) - Time lag highlighted
Weak Q1 results and flat EBITDA guidance have only prompted us to make minor estimate changes. Comments on increasing pricing/margins are supportive, but at the same time management highlighted the 2–3 years from tendering to execution. We believe this should serve as a reminder for consensus estimates, which has been on downward trend for the past two years. In our view, Subsea 7 is a quality company fairly valued, but the stock has over the past year suffered from unrealistic consensus earnings expectations. We maintain our HOLD and NOK110 target price.Subsea 7 is a provider of seabed-to-surface engineering, construction and services contractor to the offshore energy industry. Co. provides products and services required for subsea field development, including project management, design and engineering, procurement, fabrication, survey, installation, and commissioning of production facilities on the seabed and the tie-back of these facilities to fixed or floating platforms or to the shore. Co. also provides products and capabilities to deliver full Life of Field services to its clients. Through its i-Tech Division, Co. provides remotely operated vehicles and tooling services to support exploration, production and drilling activities.
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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