Valaris (VAL -25.3%) is downgraded to Market Perform from Outperform at Wells Fargo, where analyst Coleman Sullivan says he cut EBITDA forecasts through 2021 to account for revised rig startup assumptions, more conservative utilization and dayrate assumptions on floaters and revised cost assumptions.
Sullivan, who continues to be disappointed by the lack of contracts at rates peers are able to achieve, sees the company's outlook having more inherent risk going forward.
On Seeking Alpha, Henrik Alex said the company's first earnings report following the Ensco-Rowan merger "shocks investors with massive cash usage [and] surprisingly weak outlook for the ultra-deepwater segment with further dayrate recovery likely delayed until at least the second half of next year."
VAL's free cash flow for the quarter was "negative by a whopping $375M, causing the company's remaining pro forma cash balance adjusted for roughly $741M in payments related to the recent debt tender offer to decline to just $353M," Alex writes.
Now read: Valaris PLC - Off To A Bad Start »
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