.September 24, 2024 2:08 PM

Susquehanna analysts initiated coverage on Valaris (NYSE:VAL) with a Neutral rating and a price target of $62 on the stock. Valaris is the largest offshore drilling operator by rig count, operating across six continents in deepwater and shallow water markets. The analysts project strong EBITDA growth in the coming years as Valaris’ floating rigs transition to higher market rates. However, they caution that aligning new contracts with expiring ones may pose a risk of downtime for floating rigs in 2025. They forecast a 45% CAGR in EBITDA from 2024 to 2026, with FCF improving from negative $64 million to $526 million in 2026. Despite recognizing Valaris’ growth potential, the analysts maintain a more conservative outlook due to uncertainty around certain floating rigs’ contract status.