FBR Capital Lifts PT on Noble Corporation (NE) on Sum-of-Parts

March 20, 2013 6:56 AM EDT Send to a Friend
Get Alerts NE Hot Sheet
Price: $20.68 +0.19%

Rating Summary:
    20 Buy, 17 Hold, 0 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 26 | Down: 24 | New: 24
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FBR Capital raised its price target on Outperform-rated Noble Corporation (NYSE: NE) from $48 to $50 citing compelling risk/reward that they say should not be passed up. The price target represents 39% upside from current levels.

The firm looked to quantify the potential value that could be unlocked from a spin-off of non-core assets, which they remain convinced that this is a 2013 event.

The two companies:

"Spinco. Our analysis assumes Noble spins off 21 older jackups, six floaters, and three other rigs. These rigs account for roughly 12% of our published 2014 EBITDA estimate, and we then apply a 4.6x 2014 EBITDA multiple. This represents the median multiple for Hercules Offshore's multiple, which has much-lower-spec jackup assets, and Rowan's multiple, which has more premium rigs."

"Noble parent valuation. With respect to the remaining parent company, we believe it should trade similarly to higher-spec deepwater leveraged offshore drillers. Accordingly, we use a 7.1x 2014 EBITDA multiple, which is equal to the median multiple for Atwood Oceanics (NYSE: ATW), Seadrill (NASDAQ: SDRL), Ensco PLC (NYSE: ESV), and Ocean RIG (NASDAQ: ORIG)."

For an analyst ratings summary and ratings history on Noble Corporation click here. For more ratings news on Noble Corporation click here.

Shares of Noble Corporation closed at $36.19 yesterday.


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