Subsea 7 (SUBC:NO) Stock Outlook Adjusted by Jefferies: What Investors Need to Know
In a recent development, Jefferies revised its price target for Subsea 7 (OTC: SUBCY) to NOK230.00, down from NOK240.00, while maintaining a Buy rating. This adjustment comes after a strong second quarter, setting high expectations for the subsequent quarter.
Jefferies anticipates a slight increase in the Group margin, driven by the company's strong performance in the Renewables sector despite a softer sentiment projected for the third quarter of 2024. The backlog is estimated at around $11.5 million, falling short of consensus, with potential influence on free cash flow due to fleet investments, including the acquisition of Seven Merlin.
Despite the price target revision, Jefferies remains optimistic about Subsea 7's performance, particularly in renewable energy projects. The company's strategic decisions, such as fleet expansion, reflect in its backlog and free cash flow forecast. Subsea 7 reported a significant increase in financial performance for Q2 2024, with record order intake and backlog, adjusted EBITDA surge, and net income rise.
However, Bernstein SocGen Group downgraded Subsea 7 to Market Perform due to valuation grounds, adjusting the price target to NOK214.00. The potential for strong free cash flow generation is acknowledged, with estimated yields over the years 2025 to 2027.
InvestingPro Insights provide additional context on Subsea 7's financials and market position. The company's P/E ratio and revenue growth align with potential undervaluation. The company's financial health appears solid, supporting its ability to invest in fleet expansion.
In conclusion, despite recent developments and analyst ratings, Subsea 7's performance in renewable energy projects and strategic decisions indicate positive future prospects. Investors should consider the company's financials, market position, and growth potential when making investment decisions.