Valaris (Buy, TP: USD90.00) - Focus on the out-years
We believe a continued strong rig market is likely to give a tailwind for the Valaris shares, despite some near-term challenges for its North Sea jackups. These challenges, along with pushing reactivation of its idle drillships and jackups slightly further out in time, have led us to lower our 2023 and 2024 estimates, and we expect consensus to follow. Given the strength of the offshore drilling market, we believe investors are willing to look at the out-years, with 2025e the first with meaningful cashflow generation, and EV/EBITDA of 3.7x. We reiterate our BUY and USD90 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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