UPDATE: Credit Suisse Downgrades Valaris plc (VAL) to Underperform

(updating comment)

Credit Suisse analyst James Wicklund downgraded Valaris plc (NYSE: VAL) from Neutral to Underperform with a price target of $0.10 (from $0.60).

The analyst comments "In our view, VAL has been most negatively affected of the offshore drillers by COVID-19 disruptions, given its disproportionate spot market exposure, in particular on the floater side (no backlog beyond 3Q21). Management noted it expects no material recovery on the floater side for over 2 years, in line with our UDW rate deck, which has rates flat at $160k/d through YE’21. The recent macro weakness in offshore pricing and activity put what was already a tight liquidity situation into a very challenging spot. We model essentially the entire $1.6B revolver needed to fund the business through YE’21. On the call, mgmt. pointed to the evaluation of a “debt restructuring.” With the front-end bonds trading at less than 10% of par we think the credit market is already pricing this in. We are more negative on VAL’s long-term outlook barring any unforeseen macro tailwinds and are downgrading our rating from Neutral to Underperform."

For an analyst ratings summary and ratings history on Valaris plc click here. For more ratings news on Valaris plc click here.

Shares of Valaris plc closed at $0.37 yesterday.

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