On Thursday, Evercore ISI maintained its "In Line" rating and a $9.00 price target for Borr Drilling (NYSE:BORR). The firm highlighted the company's positive momentum, which has led to a doubling of its dividend to $0.10 per share from the previous $0.05. This increase is in accordance with Borr Drilling's strategy to progressively boost shareholder returns as earnings rise. The company's robust contract portfolio and strong market utilization, particularly in the supply-constrained jack-up market, are key factors behind its momentum and visibility.
Borr Drilling has experienced a notable year with eleven new contract commitments secured, totaling 1,743 days and $318 million in potential revenue. This includes five contracts signed after the first quarter of 2024. The company also marked a milestone by securing its first-ever contract with a daily rate exceeding $200,000 on a clean day rate basis.
Despite receiving a notice of temporary suspension of operations for its rig "Arabia I" in Saudi Arabia, expected to last up to 12 months starting in the second quarter, Borr Drilling is confident of re-contracting the rig before the end of the third quarter of 2024. The company also issued an additional $200 million of senior secured notes due in 2028, priced at 102.5%, with the proceeds slated for capital expenditures and funding working capital.
Looking ahead, Borr Drilling anticipates the delivery of its newbuild rig "Vali" by the end of 2024. The company plans for the rig to immediately join the operational fleet to capitalize on the high utilization rates and limited near-term availability of rigs. Evercore ISI's reiteration of the In Line rating reflects the firm's continued confidence in Borr Drilling's stock performance.
InvestingPro Insights
Borr Drilling's (NYSE:BORR) recent performance and strategic moves have caught the attention of investors and analysts alike. In light of Evercore ISI's maintained rating and price target, several key metrics and InvestingPro Tips provide further insight into the company's financial health and market position. Borr Drilling's market capitalization stands at $1.68 billion, reflecting a significant presence in the industry. The company's P/E ratio, which is currently at 74.22, indicates a high valuation relative to current earnings, but this is somewhat mitigated by a lower adjusted P/E ratio of 70.13 for the last twelve months as of Q4 2023.
The company's impressive revenue growth of 73.86% over the last twelve months signals strong business expansion, which aligns with the positive momentum highlighted by Evercore ISI. However, the InvestingPro Tips suggest caution, as Borr Drilling operates with a significant debt burden and does not pay a dividend to shareholders, which could be important considerations for risk-averse investors. On the upside, analysts expect the company to be profitable this year, and it has been profitable over the last twelve months. The stock's price movements have been quite volatile, which could present opportunities for investors with a higher tolerance for risk.
For those interested in a comprehensive analysis, additional InvestingPro Tips on Borr Drilling are available, including insights into valuation, earnings multiples, and stock price volatility. Readers looking to delve deeper can use the coupon code PRONEWS24 to receive an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro, where 6 more tips await to guide your investment decisions.
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