SUBC: Major Contracts And Sector Shifts Will Drive Future Outperformance

Analysts have slightly reduced their fair value price target for Subsea 7 from NOK 229.88 to NOK 228.56. This change reflects updated expectations for growth and margin performance based on recent industry research.

Analyst Commentary

Analysts have provided a range of perspectives on Subsea 7 following recent coverage and price target adjustments. Their assessments highlight varying expectations for the company's growth outlook, execution capabilities, and relative positioning within the sector.

• Bullish analysts have increased their price targets, which reflects confidence in Subsea 7’s potential for margin improvement and future growth.
• There is a positive outlook on the company’s ability to leverage internal initiatives and capitalize on self-help opportunities. These efforts may drive sustained earnings performance.
• Analysts highlight Subsea 7's strong relative positioning within the oilfield services sector and suggest that it may outperform peers in a competitive landscape.
• Continued interest in oilfield services, rather than exploration and production, underscores expectations for higher operational efficiency and superior growth prospects within Subsea 7’s core business areas.

• Some analysts maintain a cautious stance due to uncertainties surrounding the pace of earnings growth and the execution of strategic initiatives.
• While growth opportunities are identified, concerns remain about potential volatility in industry demand that could affect Subsea 7’s longer-term performance.
• Neutral ratings indicate that the current valuation is seen as fair and that there are limited short-term catalysts to drive significant upside in the share price.
• Risks associated with broader sector shifts and global market conditions are noted as factors that could temper near-term enthusiasm.

What's in the News

• Subsea 7 approved a special dividend of 105 million, equating to approximately NOK 4.15 per share. This dividend will be paid after a permitted business divestment related to the merger with Saipem. (Key Developments)
• Subsea 7 has been awarded a major contract with Aramco for the engineering, procurement, construction, and installation of 106 kilometres of pipelines and modification of existing offshore facilities in Saudi Arabia. Activities are scheduled for 2027 and 2028. (Key Developments)
• Seaway7, part of the Subsea 7 Group, secured a contract with Synera Renewable Energy for the transport and installation of 35 inter-array cables at the Formosa 4 Wind Farm in Taiwan. Seaway7 is also the preferred contractor for the upcoming Formosa 6 project, with offshore work beginning in 2028. (Key Developments)
• Subsea 7 received a major contract from Turkish Petroleum Offshore Technology Center for the engineering, procurement, construction, and installation of subsea umbilicals, risers, and flowlines for phase 3 of the Sakarya field development in the Black Sea. (Key Developments)

Valuation Changes

• Consensus Analyst Price Target: Reduced slightly, moving from NOK 229.88 to NOK 228.56.
• Discount Rate: Decreased from 7.06 percent to 6.67 percent, reflecting a lower perceived risk profile.
• Revenue Growth: Increased marginally from 3.27 percent to 3.40 percent.
• Net Profit Margin: Remained stable with a slight rise from 6.48 percent to 6.49 percent.
• Future P/E: Declined modestly from 16.27x to 15.90x, which indicates a lower valuation multiple applied to future earnings.