The broker's analysts said the oil services firm has the second largest jack-up rig fleet in the Middle East and North Africa, which is “perfectly suited” for the needs of leading oil companies
() has an “unsustainably low valuation” and is the least expensive oil services firm versus its global peers, according to analysts at Numis Securities.
In a note initiating coverage on the stock with a ‘buy’ rating and US$24.3 price target, the broker said the main market-listed firm is the second-largest jack-up rig owner in the Middle East and North Africa (MENA) region, with its fleet “perfectly suited” for the needs of leading oil companies.
The analysts pointed out that ADES has “high revenue visibility” with 95% of their 2019 earnings forecast already covered, as well as 76% of 2020, and 56% for 2021.
They said they see “more upside than downside risks over the next few years”, particularly if day rates for the jack-up rigs increase.
In mid-morning trading on Tuesday, ADES shares were steady at US$13.7, a 43.6% discount to Numis’ target price.
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