Subsea 7 (Buy, TP: NOK200.00) - Growing confidence in long-term earnings potential
Supported by 2025e margin comments with its Q3 report (EBITDA margins set to reach the top end of 15–20%) and bid opening on the Petrobras PLSV tender late last week, we see reasons to be increasingly confident about Subsea 7’s long-term earnings potential. At dayrates offered for its PLSVs, EBITDA per vessel is set to be 3–4x more than current contracts, creating a solid base for EBITDA for 2025e and beyond. We have increased our 2025e EBITDA by 8%, putting us 10% above consensus. We reiterate our BUY and have raised our target price to NOK200 (180); the stock is trading at a 2-year forward EV/EBITDA of 3.4x, below its historical average of 5.2x.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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