Valaris (Buy, TP: USD65.00) - Operational leverage
Thanks to ongoing improvements in the ultra-deepwater segment, Valaris seems well placed to announce the reactivation of more UDW rigs in the coming quarters. As dayrates have established at the USD300k level, we estimate payback on reactivation at around one year, which we believe should make it appealing for management to reactivate more rigs, likely in a disciplined manner. We reiterate our BUY and have raised our target price to USD65 (50) on our new dayrate and asset-value assumptions.
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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