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Investing.com - UBS upgraded Arabian Drilling Co (TADAWUL:2381) from Neutral to Buy while lowering its price target to SAR86.00 from SAR98.00, citing an improved risk/reward profile despite recent challenges.
The Saudi Arabian drilling contractor’s shares have fallen 15% over the past month following weak second-quarter results, cautious third-quarter guidance, and the announcement that dividend payments would be halted for 2025.
Despite cutting estimates significantly to account for these developments, UBS identified several positive factors, including strong backlog additions in the second quarter and early third quarter, along with the company’s first signed international contract.
UBS noted that Arabian Drilling currently trades at approximately a 10% discount to the market value of its rigs, which the firm believes should provide downside protection for investors.
The 12% reduction in price target to SAR86.00 reflects adjusted expectations, but the upgrade to Buy indicates UBS sees potential upside from current share price levels.
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