TGS (Hold, TP: NOK150.00) - Fairly valued
We expect only a gradual recovery in seismic revenues, leaving us well below consensus on 2023–2024e EBIT. Overall, we are concerned consensus is overstating E&P companies’ appetite to increase exploration spending, and that the lack of counter-cyclical investments in recent years will cap TGS’ earnings capacity. We believe the stock is fairly valued on DCF and earnings multiples, and following a change of analyst, we reiterate our HOLD but have raised our target price to NOK150 (90).TGS Nopec Geophysical provides geoscience data to oil and gas exploration and production companies worldwide. In addition to global geophysical and geological data libraries that include seismic data, magnetic and gravity data, digital well logs, production data and directional surveys, Co. also provides advanced processing and imaging services, interpretation products, permanent reservoir monitoring and data integration solutions.
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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