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Investing.com - JPMorgan has upgraded Ades Holding Co (ADES:AB) from Neutral to Overweight and raised its price target to SAR20.90 from SAR16.50, citing improved offshore rig market conditions.
The upgrade follows Ades’ Q3 results and reflects JPMorgan’s updated model, which includes an increase to the effective offshore rig count driven by higher utilization of the Shelf Drilling fleet and improved offshore day rate estimates.
JPMorgan noted that with 7 to 8 rigs returning to work in Saudi Arabia, potentially just the first phase, the jack-up market will likely tighten sooner than previously anticipated, leading to revised net income estimates of +1%, -7%, and +12% for fiscal years 2025, 2026, and 2027, respectively.
The firm’s net income projections for Ades are in line with Bloomberg consensus for FY2025 and 3.5%/27% ahead for FY2026/27, despite acknowledging that the company’s balance sheet remains stretched with 2026E net debt/EBITDA at 3.6x.
JPMorgan highlighted Ades’ significant contract backlog of SAR 28 billion and noted that the company has successfully redeployed and won new contracts for previously suspended jack-ups, with its core offshore jack-up fleet now operating at close to 100% utilization.
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