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Investing.com - Citi downgraded Noble Corporation (NYSE:NE) from Buy to Neutral on Thursday, while also lowering its price target to $32.00 from $35.00. According to InvestingPro data, the stock currently trades at an EV/EBITDA ratio of 5.37x, with a P/E ratio of 10.26x.
The investment bank cited valuation concerns following the stock’s rally back above $30 per share as the primary reason for the downgrade. Citi also assigned a High Risk rating to the offshore drilling contractor. InvestingPro analysis shows the stock has gained nearly 8% in the past week, with its RSI indicating overbought conditions. The company maintains strong fundamentals with a current ratio of 1.57x and healthy profit margins of 44%.
Citi’s analysis indicates that Noble’s 2027 estimated enterprise value to EBITDA ratio would be approximately 5.7x, with a free cash flow yield of about 10%, based on seventh-generation deepwater rig rates averaging around $400,000 per day.
The downgrade factors in an assumption that Noble will stack two additional rigs, specifically the Endeavor and Apex. Citi also noted that its commodities team anticipates downside risk to crude oil prices in the second half of 2025.
In the same research note, Citi raised price targets for other companies in the sector, increasing FTI’s target to $41 from $35 and VAL’s target to $50 from $47.
In other recent news, Noble Corporation reported its Q1 2025 earnings, revealing a revenue of $874 million, surpassing the forecast of $860.57 million, though earnings per share fell short at $0.26 against the anticipated $0.36. The company has a total backlog of $7.5 billion, marking a 30% increase from the previous quarter, supported by recent contract wins. JPMorgan recently upgraded Noble’s stock rating to Overweight, setting a price target at $30.00, citing a preference for offshore projects over North American markets. This upgrade follows Noble’s management expressing confidence in securing long-term work for their fleet, potentially enhancing earnings visibility into 2026.
Additionally, Noble Corporation announced the results of its annual general meeting, including the election of board members and the ratification of PricewaterhouseCoopers LLP as the independent accounting firm for 2025. The meeting also approved various resolutions, such as the authorization for the board to allot shares. JPMorgan, however, adjusted its price target for Noble from $31.00 to $30.00 while maintaining a Neutral rating, highlighting ongoing customer engagement for projects in 2026-2027.
Noble’s recent contracts with Shell and Total Energies (EPA:TTEF) are expected to bring significant revenue, with the contracts including substantial rig upgrades. These developments reflect Noble’s strategic initiatives and operational achievements amid market volatility, indicating potential stability and growth prospects for the company.
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