Valaris: Upgrading Shares On Improved Financial Flexibility And Strong Buyback Commitment

Summary

• Last month, Valaris reported better-than-expected Q1/2023 results and reiterated its full-year outlook, with improved profitability expected for the second half.
• The company also released a new fleet status report with a total backlog up by almost 15% sequentially to $2.8 billion.
• Subsequent to quarter-end, the company managed to improve its capital structure thus adding almost $500 million in incremental liquidity.
• After increasing its share repurchase authorization to $300 million, the company intends to spend $150 million for share buybacks until the end of the year.
• With Valaris moving closer to an earnings inflection point, substantially improved financial flexibility, and a resulting strong commitment to share repurchases, I am raising my rating on the stock to "Buy" from "Hold" and would urge investors to initiate or add to existing positions on any sign of weakness.

jimmcdowall

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.