Seadrill: Improved Execution, Undemanding Valuation, Decent Prospects - Buy

Henrik Alex Investing Group Follow Summary Leading offshore driller Seadrill Limited reported better-than-expected results, with revenue and earnings per share coming in well ahead of expectations. Adjusted EBITDA of $144 million and Adjusted EBITDA margin of 32.1% represented new two-year highs for the company. To account for the better-than-expected quarter, management raised full-year guidance for revenue and Adjusted EBITDA. On the conference call, management stated expectations for a materially tighter environment in 2027 with drillship utilization approaching the mid-90% range. Given improved execution, I am no longer applying a valuation discount. In combination with higher profitability expectations, I am raising my price target from $36 to $61 while reiterating my "Buy" rating on Seadrill's stock. Looking for more investing ideas like this one? Get them exclusively at Value Investor's Edge. Learn More » Anastasia Yakovleva/iStock Editorial via Getty Images Note: Seadrill Limited or "Seadrill" ( SDRL ) has been covered by me previously, so investors should view this as an update to my earlier articles on the company. Please note also that Seadrill is This article was written by Henrik Alex 21.1K Followers Follow I am mostly a trader engaging in both long and short bets intraday and occasionally over the short- to medium term. My historical focus has been mostly on tech stocks but over the past couple of years I have also started broad coverage of the offshore drilling and supply industry as well as the shipping industry in general (tankers, containers, drybulk). In addition, I am having a close eye on the still nascent fuel cell industry.I am located in Germany and have worked quite some time as an auditor for PricewaterhouseCoopers before becoming a daytrader almost 20 years ago. During this time, I managed to successfully maneuver the burst of the dotcom bubble and the aftermath of the world trade center attacks as well as the subprime crisis.Despite not being a native speaker, I always try to deliver high quality research to followers and the entire Seeking Alpha community. Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.