Seeking Alpha Article Echoes DeepValue's Warning on Borr Drilling's Overvaluation

What happened

A Seeking Alpha article published on February 23, 2026, contends that Borr Drilling's share price lacks support from future revenues, aligning with the bearish assessment in DeepValue's latest master report. DeepValue rates Borr as a POTENTIAL SELL with conviction 4.0, citing elevated net debt/EBITDA of 4.33x, thin interest coverage of 1.5x, and reliance on optimistic assumptions for contracting unplaced Noble rigs and stable Pemex collections. The report highlights critical risks such as cancellable backlog, concentration in volatile markets like Mexico and Saudi Arabia, and high fixed interest expenses that constrain free cash flow. With intrinsic values ranging from $3.00 in a bear case to $6.50 in a bull case, and a base of $5.20 versus the current $4.51 price, the equity appears overvalued absent significant deleveraging or revenue improvements. Both sources underscore that without execution success or market tailwinds, downside risk outweighs potential upside, reinforcing a cautious stance.

Implication

The convergence of external analysis with DeepValue's report signals heightened risk of permanent capital loss if operational missteps or market softness occur, given Borr's leveraged balance sheet and cyclical exposure. Key near-term catalysts include contracting unplaced Noble rigs, managing Mexico receivables, and hitting EBITDA targets, with failures likely exacerbating leverage and triggering downgrades. In the base scenario, upside is limited to approximately 15%, while the bear case implies a 33% downside, creating an unfavorable risk-reward profile at current levels. Investors should consider reducing exposure above the $5.25 trim level or waiting for entry below $3.75, as outlined in DeepValue's judgment, to mitigate downside. Continuous monitoring over the next 6-12 months is essential, with negative developments such as further rating downgrades or contract suspensions necessitating immediate defensive action.

Thesis delta

The new article does not shift the core investment thesis but reinforces the bearish outlook by providing external validation that revenue projections may be unsustainable. It underscores DeepValue's concerns about leverage and execution risks, emphasizing that market optimism is poorly grounded in Borr's financial and operational realities. Consequently, the thesis remains unchanged but is strengthened, warranting increased vigilance and adherence to risk-management strategies.