Valaris (Buy, TP: USD15.00) - Consensus needs a reality check
Valaris has been a prime example of totally unrealistic consensus earnings expectations, and on yesterday’s call, management poured cold water on sell-side consensus deepwater recovery expectations. Going into the results we were 30% below consensus on 2020e EBITDA and 58% below for 2021e, and we have further trimmed our estimates. We stick with our NAV-based valuation approach on the sector, but acknowledge investor sentiment and focus need to shift away from near-term earnings to asset values in this context. However, we now include a 10% discount to GAVs to derive our target price of USD15 (23). We reiterate BUY.Ensco is an offshore contract drilling company engaged in providing offshore contract drilling services to the international oil and gas industry. As of Dec 31 2017, Co. owned and operated an offshore drilling rig fleet of 62 rigs. Co.'s rig fleet includes 12 drillships, 11 semisubmersible rigs, four moored semisubmersible rigs and 38 jackup rigs, including rigs under construction. Co.'s business consists of three operating segments: floaters, which includes its drillships and semisubmersible rigs; jackups; and other, which consists of management services on rigs owned by third-parties. Co.'s two reportable segments, floaters and jackups, provide one service, contract drilling.
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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