- We raise our target price (TP) for PVD by 5.6% but downgrade our rating from BUY to OUTPERFORM as PVD’s share price has increased 16% over the last three months. Our higher TP reflects (1) our 0.4% higher aggregate 2024-28F NPAT-MI forecast (-6%/+2%/1%/1%/1% in 2024/25/26/27/28, respectively), and the positive impact of rolling our TP forward to mid-2025.

- Our higher forecast is mainly due to  lower projected depreciation expenses for existing rigs (which are subject to no depreciation expense during moving) and lower G&A expenses (aligned with the peak period 2012-2014) to outweigh: 1) 2024’s lower shared profit from JVs, 2) 2024 higher financial expenses, & 3) higher depreciation expense for a new rig (PVD plans to use a 7- year depreciation policy vs our previous forecast of 12 years). 

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