Subsea 7 (Buy, TP: NOK120.00) - Hit by strong seasonality
The Q1 miss was largely explained by the timing of projects across all segments in the North Sea, so the full-year guidance is unchanged. While the order intake surprised on the upside, we remain concerned about the longer-term margins being challenged in 2019–2020. We still like Subsea 7 on a relative basis and maintain our BUY and NOK120 target price, based on a small premium to the historical average EV/EBITDA multiple on our below-consensus estimates.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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