Subsea 7 (Buy, TP: NOK260.00) - Improved long-term visibility
Subsea 7’s Q2 was solid overall, with beats on EBITDA and free cash flow, improved near-term guidance and record-high order intake. Management reiterated its long-term margin outlook (20%+ for 2026), and appeared increasingly upbeat about cycle duration, stating it sees demand stretching to the end of the decade (supported by a USD21bn+ tender pipeline). With high backlog visibility and improved confidence in cycle durability, we believe the valuation should focus on 2026e earnings (we are 10% above consensus on 2026e EBITDA). We reiterate our BUY and have raised our target price to NOK260 (225).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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