Forecasting Weatherford International’s Growth: Dividend Initiations and Share Repurchases Catalyzing Value

Goldman Sachs analyst Atidrip Modak has maintained their bullish stance on WFRD stock, giving a Buy rating on May 14.

Atidrip Modak’s rating is based on the anticipation of significant catalysts that are expected to propel Weatherford International’s performance in the latter half of the fiscal year 2024. The company’s strategic capital allocation plan, particularly the initiation of a dividend and share repurchase program, is projected to serve as a primary driver of value. The forecast for Weatherford International includes a robust EBITDA margin of 28% coupled with a consistent low-to-mid single-digit annual revenue growth, enabling the company to convert over half of its EBITDA into free cash flow.
Additionally, Modak’s analysis suggests that the company’s commitment to reducing debt will substantially improve its interest coverage ratio, bringing it in line with its industry peers. The expected debt reduction of approximately $600-850 million by the end of 2025 could facilitate a return of capital to shareholders, estimated at around 2% from dividends and buybacks in the second half of 2024. Furthermore, the potential for a 2% dividend yield positions Weatherford International as an appealing option for income-seeking investors, which may trigger a reevaluation of the company’s stock value. Consequently, Modak has increased the 12-month target price for the stock to $144, indicating a 15% potential upside.

In another report released on May 14, Citi also initiated coverage with a Buy rating on the stock with a $155.00 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.