Subsea 7 (Buy, TP: NOK80.00) - Potential for unusual seasonality
Subsea 7 is set to see an unusual seasonality trend for the rest of this year, with Q3 results weaker than those for Q4 – unlike in previous years. While we are c8% below consensus on Q3 adj. EBITDA, this is mostly offset by our higher estimates for Q4 for the full year. Compared to other oil service names, Subsea 7 keeps executing well, and we like the structural benefits of the subsea segment and its positioning within offshore wind. We also consider forward consensus to be more realistic, and see less risk of negative revisions than in earlier years. We find the stock attractive, trading at a 2-year forward EV/EBITDA of 4.3x, and maintain our BUY and NOK80 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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