United Securities LLC raised its price target for Ades Holding (SASE:2382) as it took note of the offshore and onshore drilling company's first-quarter results.
"ADES delivered strong financial performance in 1Q26, although net income growth was partially constrained by lower margins. However, this was in line with management guidance, and we expect margin levels to improve gradually over the coming years as integration progresses and synergies are realized," analysts said Tuesday.
For the three months ended March 31, Ades reported a net profit of 236.4 million Saudi riyals, with 2.39 billion riyals in revenue. The research firm attributed the group's robust revenue performance to the acquisition of Shelf Drilling, while noting that margin pressure following the deal limited its net overall profitability growth.
"The ongoing regional conflict has thus far had a limited impact on ADES's operations, and we take comfort from the company maintaining its EBITDA guidance of SAR 4.5-4.87bn for 2026. Nevertheless, a prolonged escalation in regional tensions could adversely affect performance, which continues to underpin our cautious outlook on the company. Overall, we raise our target price for ADES to SAR 21 per share, which implies a Hold rating," United Securities said.