On Friday, Citi analyst Scott Gruber adjusted the stock price target for Weatherford International plc (NASDAQ:WFRD), a global oilfield service company, to $95.00, down from the previous $110.00, while maintaining a Buy rating on the stock.
The revision reflects the analyst's concerns about Weatherford's exposure to declining investments in Mexico and the oil activity in Saudi Arabia. Currently trading at $68.56, near its 52-week low of $68.33, InvestingPro analysis suggests the stock is undervalued, despite two analysts recently revising their earnings expectations downward.
Gruber noted that the intensification of declines in these areas has led to a downward revision in Weatherford's fourth-quarter revenue forecast by 2% to $1.37 billion. Moreover, the EBITDA (earnings before interest, taxes, depreciation, and amortization) forecast for the same period has been reduced by 5% to $312 million, or $324 million when stock compensation is added back.
The company maintains strong fundamentals with a healthy current ratio of 2.04 and trailing twelve-month EBITDA of $1.299 billion.
Looking ahead, the analyst anticipates that Weatherford's revenue in 2025 will fall by 2%, a revision from the previously expected flat growth. The Latin American market is projected to experience a 9% decrease.
The first-quarter EBITDA forecast for 2025 has been lowered by 3% to $296 million, or $308 million excluding stock compensation, while the full-year 2025 EBITDA estimate has been cut by 5% to $1.26 billion, or $1.31 billion excluding stock compensation.
Gruber also projected that Weatherford will generate approximately $175 million in free cash flow (FCF) in the fourth quarter and around $550 million in 2025. Despite the adjustments, the analyst's Buy rating suggests a continued positive outlook on the company's stock.
Trading at a P/E ratio of 9.41, the stock shows attractive valuations. Get comprehensive insights and access to over 10 additional key metrics with InvestingPro, including detailed financial health analysis and Fair Value calculations.
In other recent news, Weatherford International reported consistent growth in its third-quarter earnings, maintaining an adjusted EBITDA margin of 25.2% and generating an adjusted free cash flow of $184 million.
The company's revenue remained stable sequentially but witnessed a 7% increase from the previous year, largely driven by a 9% surge in international revenue. Weatherford initiated a capital return program, including a quarterly dividend and share repurchases.
In addition to financial growth, Weatherford secured significant contracts in the Middle East, including a three-year contract with the Abu Dhabi National Oil Company (ADNOC) for rigless services, and contracts with the Kuwait Oil Company and a National Oil Company in Qatar.
These contracts are expected to enhance operational efficiency and reliability of the respective companies' assets, while also improving Weatherford's global market position.
Evercore ISI updated its outlook on Weatherford, reducing the price target to $142.00 from $149.00, but maintained an 'Outperform' rating. The firm's analysis indicates that despite a somewhat weaker near-term outlook, Weatherford is well-positioned to benefit from a favorable geographical mix and the sustained international and offshore market upcycle.
These are recent developments that highlight Weatherford's strategic approach and commitment to growth and profitability.
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