On Tuesday, Kepler Cheuvreux raised its rating on Saipem (SPM:IM) (OTC: SAPMF) shares from Hold to Buy, while also increasing the price target from EUR 2.50 to EUR 3.00. The upgrade follows Saipem's notable commercial success in the offshore sector, where it secured USD 7 billion in orders within a few weeks. This recent achievement has significantly contributed to the positive outlook on the company's performance.
The analyst from Kepler Cheuvreux highlighted that, despite some short-term challenges, such as projects in Thailand and Mozambique, Saipem's offshore Engineering and Construction (E&C) segment shows a robust order intake forecast for the fiscal year 2024. This uptick is expected to have a favorable cascading effect on the company's financials through 2025-2027E.
The firm's decision to adjust the valuation of Saipem's E&C offshore segment to the 2025-2026E timeframe has also played a role in the revised future value (FV), which is now approaching EUR 3. This shift in valuation methodology is aligned with the company's strong booking of its fleet for the upcoming years, which underpins the raised price target.
The analyst's statement underlined the significant commercial dynamic in Saipem's offshore business and its implications for the company's future. The updated model and the increased offshore E&C order intake forecast reflect a positive sentiment towards Saipem's stock, prompting the upgrade.
Investors and market watchers will be keeping a close eye on Saipem's performance in the coming years, as the company continues to capitalize on its commercial momentum in the offshore sector. The raised price target to EUR 3.00 from EUR 2.50 represents a notable increase in confidence in the company's growth trajectory.
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