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On Wednesday, Noble Corporation (NYSE:NE) received an upgrade from JPMorgan, moving from a Neutral to an Overweight rating, accompanied by a price target set at $30.00. JPMorgan analysts cited a shift in preference towards offshore projects compared to North American markets as a key reason for the upgrade. According to InvestingPro data, Noble maintains a "GREAT" financial health score of 3.03, with liquid assets exceeding short-term obligations. Noble’s management team, consisting of the CEO and CFO, exhibited confidence during a recent New York City roadshow in their ability to secure additional long-term work for their deepwater fleet, which is expected to enhance earnings visibility into 2026.
Despite current market volatility in both deepwater and harsh environment jackup sectors, Noble’s leadership expressed optimism about adding term work for several rigs, including the BlackRhino, Noble Viking, and Noble Valiant. These new contracts are anticipated to be announced in the near future. The company has demonstrated strong growth, with revenue increasing by 25.61% in the last twelve months. For 2025, Noble’s revenue guidance is supported by its contracted backlog, assuming the exercise of existing options. The company’s $3.25 to $3.45 billion revenue guidance aligns with the midpoint of the $1.05 to $1.15 billion EBITDA guide, reflecting strong cost control measures and an attractive P/E ratio of 7.34.
Looking ahead to 2026, JPMorgan is modeling EBITDA at $1.16 billion for Noble, slightly above the street estimate of $1.15 billion. Noble stands out in JPMorgan’s coverage for its high dividend yield, currently at 8.09% according to InvestingPro, which is supported by an annualized $2.00 per share dividend rate and underpinned by a solid balance sheet with an approximate leverage ratio of 1.2x. InvestingPro analysis suggests the stock is currently undervalued, with additional insights available in the comprehensive Pro Research Report.
During the roadshow, Noble’s management emphasized their commitment to maintaining the dividend, bolstered by strong free cash flow (FCF) generation, a robust balance sheet, and improved backlog visibility following the signing of 15 rig years’ worth of new contracts. With a free cash flow yield of 7% and gross profit margin of 43.95%, Noble demonstrates solid operational efficiency. JPMorgan’s analysis suggests that Noble will generate enough FCF to sustain the current dividend rate through 2025 and 2026. The firm believes that successfully securing additional term work in 2026 would reinforce the dividend’s stability and potentially lead to a reevaluation of the company’s stock multiple. For deeper insights into Noble’s financial metrics and growth potential, investors can access the full analysis on InvestingPro.
In other recent news, Noble Corporation reported its Q1 2025 earnings, revealing a mixed performance with earnings per share (EPS) of $0.26, which missed the forecast of $0.36. However, the company exceeded revenue expectations by reporting $874 million, surpassing the projected $860.57 million. Additionally, Noble Corporation announced a significant increase in its contract backlog, which grew by 29% to $7.5 billion over the past 70 days, thanks to new contracts with major clients like Shell. These contracts include lucrative long-term agreements set to commence in 2026 and 2027, with potential revenue enhancements through performance bonuses.
JPMorgan recently adjusted its outlook on Noble Corporation, reducing the stock price target from $31 to $30 while maintaining a Neutral rating. The firm noted ongoing customer engagement for future drilling projects despite market volatility. Furthermore, Noble Corporation’s recent shareholder meeting resulted in the re-election of several board members and the approval of various resolutions, including the appointment of PricewaterhouseCoopers LLP as the independent accounting firm for 2025. These developments underline Noble’s strategic initiatives and operational achievements, positioning it favorably in the market.
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