Valaris (Buy, TP: USD40.00) - 2027 confidence building
With ARO Drilling extensions and two West Africa jobs (DS-10 and DS-15), Valaris is progressing well in building visibility for 2027, the first year set to have proper earnings as 2025–2026e will likely be affected by rig market challenges and idle time. On top of the recently announced drillship jobs, Valaris seems well placed to build additional backlog in Nigeria and Egypt, for deepwater opportunities with startup in 2026/27. In sum, we believe its cash flow story remains on the horizon, while we consider earnings improvements key to closing the NAV gap and for intrinsic values to crystallise. We reiterate our BUY and USD40 target price.
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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