What the bad jobs report means for markets
On Wednesday, Evercore ISI adjusted its outlook on Noble Corporation (NYSE: NE), reducing the price target to $34 from the previous $41 while retaining an In Line rating. The firm’s analyst cited a reduced demand for idled capacity as the primary reason for the adjustment. According to InvestingPro data, the stock is currently trading near its 52-week low of $28.19, significantly below its 52-week high of $52.16, suggesting potential value opportunity based on InvestingPro’s Fair Value analysis. Noble Corporation has responded to the market changes by divesting two cold-stacked drillships and securing short-term work to minimize gaps, known as whitespace, in their business.
The company has been active in the past few months, announcing contracts for semisubmersibles and drillships, including the Ocean Apex, Developer, Globetrotter I, and Venturer. Additionally, Noble Corporation has plans to sell two cold-stacked drillships, the Pacific Meltem and Pacific Scirocco, which is expected to eliminate stacking costs. Management has noted a slight decrease in ultra-deepwater (UDW) contracted demand for this year, which is marginally lower than in 2024, with recent demand delays attributed to regions such as West Africa and Asia.
Noble Corporation’s management has provided guidance for 2025’s adjusted EBITDA, which falls slightly below consensus, primarily due to the challenges in securing contracted work for the BlackRhino in the US Gulf. However, they maintain that dayrates for top-tier assets are stable at mid-to-high $400,000 levels. The company is also in the midst of integrating its operations with Diamond Offshore (DO), having reached the 150-day mark of the process and achieving approximately half of its targeted synergies, with the remainder expected by year-end.
The market’s focus remains on the availability of the 7G drillship and the evolution of tendering activity for 2026. Meanwhile, Noble Corporation continues to prioritize maximizing capital returns to its shareholders. The company anticipates a roughly 30% year-over-year reduction in capital expenditures for 2025, contributing to a stronger free cash flow. In 2024, Noble Corporation returned $578 million to shareholders and still has $390 million left in its buyback authorization, with a free cash flow yield of 2% for the year. InvestingPro data reveals the company offers an attractive dividend yield of 6.88%, with management actively buying back shares, demonstrating strong commitment to shareholder returns. For deeper insights into Noble Corporation’s financial health and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro.
In other recent news, Noble Corporation has been the focus of attention from several analyst firms. Benchmark analysts maintained their Hold rating on Noble Corporation, noting the company’s pricing stability in the offshore drilling sector. They highlighted that the prices for 7G drillships and 6G floaters have remained stable, indicating a strong market position for Noble. Meanwhile, JPMorgan reiterated a Neutral rating with a $37 price target, acknowledging Noble’s recent contract achievements, including deals for the Noble Venturer, Noble Globetrotter I, and Noble Developer. However, they observed that the pace of contracting has not matched the levels of previous years.
The early termination of the Noble Deliverer rig by INPEX was also noted, with Noble set to receive the remaining contract value as a termination fee, to be reported in fourth-quarter 2024 earnings. JPMorgan forecasts Noble’s fourth-quarter 2024 EBITDA to be $295 million, aligning with consensus estimates, and anticipates increased contracting activities towards the end of 2025. Additionally, the integration of Diamond Offshore is progressing, with expected cost synergies of $100 million annually by 2025. Capital expenditures for 2025 are projected at $422 million, a significant reduction from 2024’s forecast, supporting free cash flow generation.
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