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On Wednesday, Raymond (NSE:RYMD) James increased its price target on shares of NOV Inc. (NYSE:NOV) to $19.00, up from the previous target of $18.00, while keeping an Outperform rating on the stock. Currently trading at $16.43, NOV appears undervalued according to InvestingPro analysis. The firm highlighted NOV’s strong finish to the year, marked by a solid free cash flow performance of $781 million and robust order activity. NOV’s book-to-bill ratio stood at a healthy 1.21 times, suggesting a promising setup for higher margin backlog and deliveries in the future. [Get access to 6 more exclusive InvestingPro Tips and comprehensive valuation metrics at InvestingPro]
NOV’s financial results showed strength in the face of a challenging environment, with the company expecting to catch up on capital returns in 2025. With an impressive "GREAT" Financial Health Score of 3.1 out of 5 from InvestingPro, and a current ratio of 2.57, the company maintains strong liquidity. Raymond James noted the company’s intention to distribute a larger portion of its excess free cash flow to shareholders now that it has met certain internal balance sheet and working capital goals, building on its 16-year track record of consistent dividend payments.
Despite a flat revenue outlook for 2025, NOV anticipates margin expansion of 50 to 150 basis points, beginning with an approximate 65 basis point improvement year-over-year in the first quarter of 2025. While acknowledging some headwinds, Raymond James pointed out potential opportunities in specific product lines. The firm expects earnings per share (EPS) growth to balance out any weakness in earnings before interest and taxes (EBIT), with optimism for a stronger performance in 2026.
The analyst’s commentary underscored NOV’s ability to navigate through a subdued activity landscape in the industry, with expectations of delivering value to shareholders through enhanced capital returns and continued operational improvements. The raised price target reflects confidence in the company’s prospects and its strategic initiatives aimed at financial growth and shareholder returns.
In other recent news, NOV Inc. reported robust fourth-quarter results, with adjusted earnings of $0.41 per share, surpassing analyst estimates of $0.36 per share. The company’s revenue was recorded at $2.31 billion, exceeding the consensus forecast of $2.26 billion. Despite a 1% YoY decrease in fourth-quarter revenue, the operating profit rose by 29% YoY to $207 million. Adjusted EBITDA also marked an increase of 3% to $302 million.
NOV’s full-year revenue for 2024 was reported at $8.87 billion, marking a 3% increase from 2023. The net income stood at $635 million, translating to $1.60 per diluted share. Looking forward, the company anticipates a 1-3% YoY decrease in consolidated revenues for Q1 2025, with adjusted EBITDA projected between $235 million and $265 million.
These recent developments indicate a positive investor response to the company’s earnings and revenue beat in Q4. However, it’s important to note that these are projections and actual results may vary.
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