Citi cuts Nabors stock price target to $38 from $50, keeps neutral rating

On Tuesday, Citi analysts adjusted their outlook on Nabors Industries Ltd. (NYSE:NBR), reducing the price target from $50.00 to $38.00 while maintaining a Neutral rating on the stock. This change comes as the analysts incorporate the effects of Nabors’ recent acquisition of Parker Drilling into their forecasts. According to InvestingPro data, Nabors currently trades at $31.44, down nearly 58% over the past six months, with a beta of 1.96 indicating significant market sensitivity.

The updated model by Citi predicts second-quarter EBITDA (earnings before interest, taxes, depreciation, and amortization) for Nabors at $251 million, aligning with the consensus estimates from FactSet. For the full year 2025, the analysts project an EBITDA of $952 million, which is approximately 4% below the consensus. This forecast is based on the expectation of 60 active rigs in the Lower 48 states of the U.S., with an average daily margin of $13,300 per day, decreasing to $12,000 per day by year-end. Additionally, they anticipate 87 active international rigs with an average daily margin of $17,800 per day. The company’s current LTM EBITDA stands at $867 million, with a gross profit margin of 40.2%.

Looking further ahead, Citi’s forecast for Nabors’ EBITDA in 2026 is set at $1.03 billion, which falls short of the consensus estimate of $1.08 billion. This projection assumes 62 active Lower 48 rigs with an average daily margin of $11,900 per day.

The reduction in Nabors’ price target to $38 reflects a valuation multiple of approximately 4 times the expected 2025 EV/EBITDA. Citi’s analysts cite potential negative revision risks due to lower crude oil prices as the reasoning behind the lowered valuation multiple.

In other recent news, Nabors Industries reported first-quarter earnings that significantly exceeded analyst expectations. The company posted adjusted earnings per share of $2.18, surpassing the analyst consensus estimate of a loss of $2.88 per share. Revenue for the quarter reached $742.78 million, beating expectations of $708.81 million and marking a 1.7% year-over-year increase. The strong performance was attributed to improvements in the international drilling segment and the recent acquisition of Parker Wellbore. Adjusted EBITDA for international drilling rose to $115.5 million, with daily adjusted gross margin expanding. The U.S. drilling segment faced challenges, with adjusted EBITDA declining due to reduced rig count and higher expenses. However, the company expressed optimism about adding rigs in the Lower 48 region. Nabors anticipates a slight increase in its Lower 48 average rig count and expects its international average rig count to include contributions from Parker. The company projects full-year 2025 adjusted free cash flow of approximately $80 million, excluding tariff impacts.

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