JPM says volatile macro drives concerns over oil firms' FCF, capex cycle
** J.P.Morgan says macro volatility is driving concerns around capex cycle and FCF in for European oil exploration and services firms ahead of Q3 earnings season
** For oilfield equipment & services, it expects margins to inflect in Q3 as contracts won at higher margins start to make up a greater proportion of revenues and move into profit recognition
** For exploration & production, JPM sees solid operational performance in the context of planned maintenance activity, while the outlook for growth projects seems well defined
** It upgrades Aker Solutions AKSOA.OL to "overweight" citing attractive tender pipeline and exposure to large projects in Norway
** It downgrades Subsea 7 SUBC.OL to "neutral" on concerns about the sustainability of its high order intake given its exposure to Brazil where capex could be lower
** JPM reinstates John Wood WG.L at "overweight" saying positive pricing pressure should support margin and FCF expansion in 2024
COMPANY | RATING | OLD RATING | NEW PT | OLD PT |
|---|---|---|---|---|
Aker Solutions | overweight | neutral | NOK 61 | NOK 56 |
John Wood | overweight | - | 190p | - |
EnQuest ENQ.L | overweight | - | 25p | 30p |
Tullow Oil TLW.L | overweight | - | 50p | 60p |
Var Energi VAR.OL | overweight | - | NOK 45 | NOK 50 |
Saipem SPMI.MI | overweight | - | EUR 3.20 | - |
Subsea 7 | neutral | overweight | NOK 200 | NOK 220 |
Aker BP AKRBP.OL | neutral | - | NOK 280 | NOK 330 |
Petrofac PFC.L | neutral | - | 90p | - |
Technip Energies TE.PA | neutral | - | EUR 26 | - |
Reporting by Marta Frąckowiak
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