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On Wednesday, DNB Markets reaffirmed their Buy rating on TGS NOPEC Geophysical Co ASA (TGS:NO) (OTC: TGSNF), with a steadfast price target of NOK140.00. The endorsement comes after the company’s shares experienced a roughly 20% decline since mid-January. The downturn in share value has been attributed mainly to falling oil prices. However, DNB Markets observes encouraging indicators of recovery in the seismic market.
Analysts at DNB Markets have highlighted a significant increase in demand for streamer vessels, a key resource for seismic data collection in the oil and gas industry. They note that demand in the first quarter is set to be approximately 25% higher year-over-year. TGS is preparing to capitalize on this uptick by deploying three vessels on the Norwegian Continental Shelf (NCS) during the second and third quarters of the year. This level of activity has not been seen since 2014 and is expected to contribute to a robust year-over-year growth in the company’s free cash flow (FCF) for the estimated fiscal year 2025.
The anticipated increase in FCF is projected to yield approximately 15%, a figure that DNB Markets suggests is an attractive proposition for investors. Additionally, the firm points to potential benefits arising from mergers, referring to them as "low-hanging merger-related fruit," which could further bolster TGS’s financial performance.
In summary, DNB Markets has reiterated their Buy rating on TGS NOPEC Geophysical Co ASA, maintaining a price target of NOK140.00. The firm’s analysts are optimistic about the company’s prospects, citing increased vessel demand, strategic deployments in the upcoming quarters, and potential merger synergies as drivers for a significant rise in the company’s free cash flow for the estimated year 2025.
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