Valuation and market update

In this note, we show updated valuation and market statistics for the Offshore Drilling sector.

Seadrill (Buy, TP: NOK600.00) - Consensus needs to adjust

Q1 EBITDA (excluding a one-off for future tax credits) was in line with our forecast and Seadrill reiterated guidance, which included the same one-off. Key ahead is to get visibility and de-risk the rigs with a binary outcome, namely the West Phoenix in Norway, while we are more constructive on Sevan Louisiana and Capella. Despite our more conservative view than consensus on these rigs (we are 15–17% below on 2025–2026e EBITDA), we consider Seadrill among the most attractively valued large cap o...

Q1 a bit noisy but transformation on track

'24e EBIT lowered by 1%. '25e-'26e raised by 1-3%. COGS efficiencies largely achieved; Focus now on SG&A. TP raised to DKK 430 (400). BUY

FLSmidth (Buy, TP: DKK440.00) - Mixed start to the year

Following a rather mixed Q1 report, our 2024–2026e clean EPS are virtually unchanged. We reiterate our BUY and have raised our target price to DKK440 (400) on a slightly raised SOTP multiple approach. We like the continued earnings quality improvement and further value-creation potential through an exit from Cement.

A weak quarter for mining with poor order execution

Boliden (Buy, TP: SEK500.00) -

Battered for a number of quarters by operating issues, lower metal grades at key mines and falling metal prices, we believe Boliden’s earnings headwind is now a tailwind. Moreover, on top of support from higher metal prices, we see distinct company-specific earnings drivers for 2024–2027e: 1) Odda completion; 2) Tara restart; 3) restored Rönnskär operations; and 4) normalised copper grades at Aitik. Our 2027e record earnings translate into a low P/E of c7x, and we see ample room for cash distrib...

Q1'24e: Marginally below consensus on order intake, EBIT

Estimates lowered by 1-2%. Expect guidance to be maintained. TP raised to DKK 400 (350) - BUY

Circio Holding (No_rec, TP: NOK) - Recommendation and target price wit...

We continue to like Circio’s focus on the circRNA programme and believe it will be able to secure a partnering deal in 2025. However, the funding situation is unclear. It recently announced an intention to raise cNOK50m–60m in Q2. As we have limited input on the terms of the upcoming capital raise and Atlas Capital Markets’ (the counterparty of the convertible bond facility announced in February 2023) degree of participation and conditions, we have withdrawn our target price and recommendation.

Seadrill (Buy, TP: NOK600.00) - Focus on clarity for tier-2 rigs

While the high-end deepwater market is set to retain its momentum, and focus for the investment case relates to extending its late-2025 Brazil rollovers, we see investors seeking clarity for its tier-2 harsh & deepwater rigs. We have risked such rigs (West Phoenix in particular) in our NAV and estimates, which probably explains why we are c16% below consensus for 2025–2026e. Despite these deviations and the risks of near-term share price volatility and lower 2024 guidance, we consider Seadrill a...

Ultimovacs (Sell, TP: NOK4.00) - Slower recruitment, FOCUS in focus

Total operating expenses were NOK28.6m, and cash and cash equivalents were NOK220m at end-Q1 (NOK266.6m at end-Q4 2023). The company recently announced initiatives to extend the financial runway to Q4 2025. While data from the fully recruited FOCUS trial is expected in Q3, the number of new recruited patients in the DOVACC and LUNGVAC trials was lower in Q1 versus Q4 2023. We reiterate our SELL and NOK4 target price.

Q1 report: life goes on

Valuation and market update

In this note, we show updated valuation and market statistics for the Offshore Drilling sector.

Consensus back in focus and tier-2 deepwater risk

With the start of the Q1 reporting season for Offshore Drilling, we sense increased investor attention on the risk to consensus. Although we like the investment case for its valuation in the out-years (2026), our estimates remain below consensus. We see potential for share price volatility as near-term consensus is revised lower, while investors gradually underwrite 2026 valuations. We also believe the gaps between contracts and increased idle-time risk for tier-2 deepwater rigs are not properly...

Valuation and market update

In this note, we show updated valuation and market statistics for the Offshore Drilling sector.

Boliden (Buy, TP: SEK420.00) - In a sweet spot

Despite low mining volumes, the Q1 results were close to our expectations, thanks to good cost control. We have made significant estimate increases on better metal price and FX assumptions, and beyond 2024 we continue to see additional earnings support from: 1) higher mining volumes due to richer metal grades; 2) normal operations at Rönnskär; and 3) growing profits from the Odda smelter. Our spot-based estimates for 2027 translate to an EV/EBIT of 5.2x, but we see significant upside potential t...

FLSmidth (Buy, TP: DKK400.00) - Another transformation year

Ahead of the Q1 results (due at 07:30 CET on 15 May), we have made relatively minor estimate changes, raising our 2024–2026e clean EPS by c2% on average. We reiterate our BUY, and have raised our target price to DKK400 (370).