Subsea 7 (Hold, TP: NOK90.00) - Pause in estimate reductions
Despite our view that 2020 guidance leaves some small downside to consensus, near-term earnings estimate reductions (2020) are likely to end after a two-year negative trend. Long-term (2021e and beyond) we still find sell-side consensus too optimistic but see more realism among investors. In our view the PLSV rollovers in Brazil remain the main challenge for long-term earnings. Management believes three of four PLSVs may remain in Brazil; such a scenario could result in material EBITDA cuts based on current rates. We retain our HOLD and NOK90 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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