Saipem wins new contract in Angola, prices may rise up to 2.7 euros

Important price sensitive news for Saipem. The listed company in the engineering sector announced that it had been awarded a new offshore contract in Angola. Those who only invest in shares in the industrial sector know perfectly well that news about new orders, especially if of significant dimensions, tend to have a positive impact on the stock concerned. The question then is how Saipem shares will react to the news of the new contract awarded in Angola.

To try to give an answer it is necessary to analyze in detail what the new order entails starting from its amount.

New contract for Saipem in Angola: the details

Saipem management has announced that it has signed an offshore contract with Azule Energy Angola (company controlled by Azule Energy Holdings, a corporate joint venture between Eni and British Petroluem) concerning the development of the Ndungu Field project. The latter, in turn, is an integral part of the larger Agogo Integrated West Hub project, located approximately 180 km off the coast of Angola, Africa.

The value of the new order is approximately 850 million dollars.

As highlighted by the top management of the listed company, the award of this new project leads to the consolidation of Saipem’s position in Angola, both in deep waters and in shallow waters.

Impact on Saipem prices

Saipem closed yesterday’s session at 2.21 euros. In the last month the stock has fallen by 5 percent, however over longer time frames, prices recorded a significant appreciation. For example, compared to a year ago, prices are 75 percent higher but even since the beginning of the year there has been a moderate positive change with a green of 48 percent.

We are therefore talking about a stock which, after having grown so much in the last year, has recently been pulling the handbrake with investors moving to cash out.

That said, analysts appear to maintain a positive view on the stock. The average rating is outperform, meaning it will do better than the reference sector, while the average target price is 2.7 euros. This is a target price approximately 50 cents higher than current prices. This implies a fair amount of upside potential.

However, they exist different nuances in analysts’ assessments which, compared to a few months ago, are no longer convergent. For example, for Exane the Saipem shares are Overweight with a target price of 2.9 euros but for Mediobanca they do not go beyond Neutral with a much lower target price: 2 euros (lower than current prices). A completely different opinion compared to that expressed by Piazzetta Cuccia was formulated by the US investment bank Bank of America for which Saipem shares are to be purchased with a target price of 2.9 euros.

From a technical analysis point of view, the charts seem to suggest the existence of one first resistance at 2.22 euros and one second resistance at 2.287 euros. As regards the supports, the first can be placed at 2.153 euros and the second at 2.109 euros.

From the point of view offundamental analysis it is the news about the new contract in Angola that potentially weighs the most. Conversely, the confirmation of Alessandro Puliti as CEO and the appointment of Elisabetta Serafin as the new president of Saipem should not have much impact on the stock.

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