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PVD [UNDERPERFORM -17.2%] - Oil price jumps but day rate recovers slowly - Update

We downgrade PVD to a UNDERPERFORM rating as we think the stock has risen to overvalued territory given its tepid earnings recovery outlook and poor operating cash flow. We raised our target price by 13.3% mainly because: 1) we increased our oil price assumptions across the forecast horizon, 2) lowered WACC due to the risk-free rate and 3) used a higher target P/B in line with changes to the regional peer median.