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On Tuesday, Citi analyst Scott Gruber revised the price target for Weatherford International plc (NASDAQ:WFRD), reducing it from $90.00 to $70.00, while reaffirming a Buy rating on the stock. With the current stock price at $48.88, InvestingPro data shows the company is trading significantly below both the new target and its Fair Value, suggesting potential upside opportunity. The adjustment follows a reassessment of the company’s financial model, leading to a lowered forecast for Weatherford’s future earnings before interest, taxes, depreciation, and amortization (EBITDA).
Gruber’s report indicates a decrease in Weatherford’s second-quarter adjusted EBITDA estimate by 15%, setting it at $246 million, which is 2% below the consensus estimates. For context, InvestingPro shows the company’s last twelve months EBITDA stands at $1.19 billion, with strong financial health metrics including a healthy current ratio of 2.08. This reduction is attributed to anticipated declines in both revenue and margin. The revised model also suggests a 20% cut in the full year 2025 EBITDA forecast, now expected to be $970 million, which is 3% below the consensus of market analysts.
The revised outlook for Weatherford includes a year-over-year (yoy) decline in North American (NAM) revenues by 15%, a 2% decrease in the Middle East/North Africa/Asia segment, a significant 40% drop in Latin America (LatAm), and a 12% fall in Europe/Sub-Saharan Africa/Russia. These projections are based on an adjusted EBITDA margin of 21%.
Looking ahead to 2026, Citi anticipates Weatherford’s EBITDA to reach $1.01 billion, which falls short of the consensus estimate of $1.11 billion. This forecast includes a 2% yoy decrease in NAM revenues, while International revenues are projected to increase by 1%, with an adjusted EBITDA margin of 21.8%.
Furthermore, the company’s free cash flow (FCF) forecasts have also been downgraded. For 2025, the FCF is now projected at $414 million, below the consensus of $486 million, and for 2026, it is expected to be $426 million, trailing the consensus estimate of $523 million. The lowered price target of $70 is based on an approximate 6.5 times multiple of the estimated 2025 enterprise value to EBITDA, which Gruber notes is slightly raised due to the belief that the risk of negative revisions in Mexico is now well-recognized in the market. Despite these revisions, InvestingPro analysis indicates the stock remains undervalued, with additional insights available in the comprehensive Pro Research Report, which provides deep-dive analysis of 1,400+ top US stocks.
In other recent news, Weatherford International PLC reported its first-quarter 2025 earnings, surpassing analysts’ expectations with an earnings per share (EPS) of $1.03 compared to the forecast of $0.92. Revenue was in line with expectations at $1.19 billion, highlighting the company’s ability to maintain stable sales despite challenging market conditions. The company continues to focus on innovation and operational efficiency, which has contributed to its strong performance. Meanwhile, Raymond (NSE:RYMD) James downgraded Weatherford’s stock rating from "Strong Buy" to "Outperform," citing challenges related to the company’s exposure in Mexico and ongoing macroeconomic uncertainties.
Weatherford’s management has updated its guidance to reflect the effects of certain asset sales, and the company is concentrating on improving free cash flow conversion and maintaining a strong balance sheet. The recent downgrade by Raymond James also included a reduction in the price target from $73.00 to $69.00, reflecting a more cautious outlook. Despite these adjustments, the valuation remains attractive compared to larger industry peers. Weatherford’s recent earnings announcement and strategic initiatives indicate resilience in a tough market, with plans to capitalize on growth opportunities in the Middle East and Asia.
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