Saipem: SG upgrades to buy; raises target price.
(CercleFinance.com) - Société Générale (SG) says that the probable transformation of Saipem into a capital-intensive company is underestimated in its opinion, as detailed in its report.
At the same time, SG has raised its target price for the stock from 3.97 euros to 4.99 euros (+25.7%).
Q3 results published by Saipem have convinced analysts that "Saipem's business philosophy is about to change dramatically." - the company is currently reviewing its business model and should detail what it plans to do "in early 2018". Already, the group's CFO belives that the company should make normative capex of around 300 million euros p.a., vs. the historical average has been about 600 million euros, the broker reports.
"This strongly contrasts with Subsea 7, (another European oil services company), which is sticking to its traditional asset-heavy strategy," SG adds.
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