Seadrill (SDRL: NYSE)

Seadrill (SDRL) provides offshore contract drilling services to the oil and natural gas industry. Offshore drilling contractor Seadrill Limited reported a record day rate of $545,000 for a one-well contract in the first quarter of 2024, the highest in the current cycle. The lucrative profits from this drilling contract will have a positive impact on its Q2 earnings report.

“Seadrill has had a strong start to the year, delivering safe, efficient operations to our customers, securing a cycle-high day rate that offers an encouraging indication of market potential, and returning capital to shareholders,” said Simon Johnson, CEO of Seadrill. He further added that as the cycle progresses, Seadrill’s competitive fleet, focused market positioning, and balance sheet strength will support durable earnings and capital returns.

The company’s order backlog as of now stood at approximately $2.8 billion, which includes about $108 million in contract additions since the end of February. Among these are several new contracts, including a one-well contract in South Korea for the drillship West Capella, estimated at $32 million, and a six-month contract extension in the U.S. Gulf of Mexico for the drillship West Neptune, valued at approximately $86 million.

We are bullish on SDRL above $47.00-$48.00. Our upside target is $78.00-$80.00.

Vericel (VCEL: NASDAQ)

Vericel (VCEL) is a commercial-stage biopharmaceutical company with cellular treatments for severe burn care and sports medicine. Its flagship sports-medicine product, MACI, is used to replace damaged cartilage in the knee, resulting in shorter patient recovery times and better long-term results than other procedures. MACI was the main growth driver with 22% revenue growth, achieving the highest number of implants, biopsies, and surgeons using it in any quarter since the product launched. If this trend continues, the growth potential of its drug pipeline will be priced in very soon.

Vericel is also on the verge of launching two high potential blockbuster drugs. One is a burn-care product, Epicel, a skin graft used for healing patients with severe burns over a significant portion of their bodies. The other product, Nexobrid, is an ointment used to remove dead burned skin to improve healing. Epicel generated 22% revenue growth, and Nexobrid became available in the fourth quarter. The continued growth of Vericel’s core products and the expectations for future revenue from new products drove the positive stock price movement during the quarter.

We are bullish on VCEL above $43.00-$44.00. Our upside target is $64.00-$65.00.