Valaris (Buy, TP: USD52.00) - Cash flow remains on the horizon
As rigs become idle and new demand is being pushed to the right, we now expect even more idle time in 2025–2026 (including tier-1 rigs). Thus, we have reduced our estimates even further and are 11–22% below consensus for 2025–2027e. While there is uncertainty for some of its rigs, we see a scenario where several units could pick up work with commencement from mid-2026, helping it to build 2027 visibility. Hence, its cash flow story remains on the horizon, and improvements would be key to help close the NAV gap and for intrinsic value to crystallise. We reiterate our BUY, but have cut our target price to USD52 (56).
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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