Buy Rating Affirmed for Weatherford International Amidst Turnaround Success and Growth Prospects

Scott Gruber, an analyst from Citi, has initiated a new Buy rating on Weatherford International (WFRD).

Scott Gruber has given his Buy rating due to a combination of factors including Weatherford International’s impressive turnaround post-pandemic and the potential for future growth. The company’s new management has successfully altered the corporate culture, leading to a performance that is expected to see EBITDA margins equal those of industry leader Schlumberger by 2024. Additionally, Weatherford’s margins are poised for further growth, driven by expansion in deepwater operations and improvements in fabrication and supply chain efficiencies. Gruber anticipates this margin growth to continue, albeit at a moderate pace, contributing to the company’s financial strength.

The expectation of a substantial free cash flow surge over the next three years—potentially greater than 25% of Weatherford’s market cap—also supports the Buy rating. This anticipated cash flow positions the company for aggressive cash returns to shareholders, with limited leverage risk. Moreover, the likelihood of Weatherford implementing a shareholder return program later in the year, combined with the company’s strengthened market reputation and the absence of a comparable mid-size peer due to CHX’s market exit, sets the stage for expected multiple expansion. Gruber’s target price of $155 is built on the premise of a 7.5x multiple on projected 2025 EBITDA, which aligns with an attractive free cash flow yield.

In another report released on April 29, Bank of America Securities also reiterated a Buy rating on the stock with a $145.00 price target.

Based on the recent corporate insider activity of 35 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of WFRD in relation to earlier this year.

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Weatherford International (WFRD) Company Description:

Weatherford International Plc provides equipment and services to the oil and natural gas exploration and production industry. It operates through two segments: Western Hemisphere and Eastern Hemispher. The company products and services are Drilling and Evaluation, Production, Completions, and Well Construction. Weatherford International was founded in 1941 and is headquartered in Baar, Switzerland.