On Monday, BofA Securities updated its outlook on Weatherford International plc (NASDAQ: NASDAQ:WFRD), raising the price target to $145 from $135 while maintaining a Buy rating on the stock.
Weatherford's management has been recognized for its consistent performance, delivering a 6% adjusted EBITDA beat in the first quarter and increasing its adjusted EBITDA guidance for 2024 to $1.41-$1.45 billion, which is 2-5% higher than the consensus estimates before the announcement.
The firm's performance was highlighted against its peers, noting that Weatherford's midpoint of the updated 2024 adjusted EBITDA guide is up by 23% compared to consensus estimates from a year ago. In contrast, consensus 2024 EBITDA forecasts for competitors Schlumberger (NYSE:SLB), Baker Hughes, and Halliburton (NYSE:HAL) have decreased by 2%, 2%, and 6%, respectively, from the previous year's levels.
"This is a function of WFRD mgmt. continuing to refocus the company on its core technology strength with operational rigor and financial discipline, while still delivering peer leading INTL growth," said the analysts.
Additionally, Weatherford has been actively improving its balance sheet by reducing debt and increasing liquidity. The company plans to redeem the remaining $82 million of its 2028 6.5% Senior Secured Notes in the second quarter of 2024, which would leave only the $1.6 billion 2030 8.625% notes due in 2030. Management at Weatherford is also in the process of developing a comprehensive capital allocation framework that includes plans for returning capital to shareholders. This strategy is expected to be announced in the second half of 2024, potentially during the second-quarter earnings call in July.
InvestingPro Insights
Weatherford International plc (NASDAQ: WFRD) is capturing the attention of analysts and investors alike. Notably, three analysts have recently revised their earnings expectations upwards for the upcoming period, signaling confidence in the company's financial trajectory. Additionally, Weatherford has been trading at a low P/E ratio relative to its near-term earnings growth, which could indicate that the stock is undervalued compared to its growth potential. The company has also demonstrated a significant return over the past week, with a price total return of 11.18%.
InvestingPro Data further enriches the picture, showing that Weatherford boasts a robust revenue growth of 15.9% over the last twelve months as of Q1 2024. The company's gross profit margin stands at an impressive 34.26%, highlighting effective cost management and a strong market position. Furthermore, the stock is trading near its 52-week high, at 98.94% of this peak, which may reflect market optimism about the company's prospects.
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