Street View: Smooth-sailing for SLB despite weaker oil macro

ChampionX

21/10/2024 12:37

** Top U.S. oilfield services firm SLB  SLB.N  posted a 13% rise
in Q3 profit, but warned of muted revenue growth in Q4 on
producers tightening budgets amid weaker oil market
    ** That dragged the stock down to close at $41.92 on Friday
vs 30 analysts' median PT of $60, per LSEG data
    
    MACRO WEIGHS BUT LONGER-TERM OUTLOOK BRIGHT
    ** RBC ("outperform", cuts PT to $61 from $67) says despite
the macro view, SLB is executing well on what's in its control
such as digital growth, margin expansion, FCF returns
    ** Raymond James ("outperform"; cuts PT to $57 from $59)
says Q4 revenue should be modestly higher, by 3%-4%, with some
positive impact on margins
    ** Evercore ("outperform"; PT $62) acknowledges industry's
cyclicality, but believes SLB's techleadership, advantageous
geographic and product line exposure should "command a higher
multiple on both an absolute and relative basis"
    ** Stifel ("buy"; cuts PT $60 from $62) expects ChampionX
deal to particularly benefit SLB's offshore business
    ** Barclays ("overweight"; cuts PT to $61 from $63), though,
expects SLB's shares to trade in line with oil until the deal
closes in Q1, which will reset estimates and potentially re-rate
the digital business
    ** Still, it lowers its estimates due to slowing spending
cycle in 2025

 (Reporting by Seher Dareen in Bengaluru)
 ((Seher.Dareen@thomsonreuters.com;))