Susquehanna starts Valaris with Neutral on uncertain contract status

Susquehanna initiated coverage of Valaris with a Neutral rating and $62 price target. Valaris has the largest offshore drilling fleet by rig count, operating in deep-water and shallow water offshore markets across six continents, the analyst tells investors in a research note. The firm forecasts “robust” EBITDA growth over the next couple years as the company’s floaters roll off lower-rate, legacy contracts onto rates closer to market. That said, it believes it may be difficult for Valaris to align new contracts with those expiring, which increases the risk of floater downtime in 2025. Susquehanna is currently forecasting less growth than consensus due to the uncertain contract status of certain floating rigs.