RBC Capital cuts SLB stock price target to $55, retains outperform

On Monday, RBC Capital Markets adjusted its financial outlook on Schlumberger Limited (NYSE:SLB), a leading oilfield services company, by reducing its price target to $55 from the previous $57. Currently trading at $41.55, SLB maintains a GOOD financial health score according to InvestingPro analysis, with analyst targets ranging from $44 to $64. Despite this change, the firm maintained its Outperform rating on the stock.

Keith Mackey of RBC Capital commented on the revision, noting that SLB remains a top pick on their preferred US Oilfield Services (OFS) list, which also includes Baker Hughes (NYSE:NASDAQ:BKR), Atlas (NYSE:ATCO) Energy Solutions (NYSE:AESI), and Patterson-UTI Energy (NASDAQ:PTEN), which has been chosen over Liberty Energy (NYSE:LBRT). With a market capitalization of $56.61 billion and an impressive 55-year streak of maintaining dividend payments, SLB has demonstrated remarkable stability. He highlighted the closing of the CHX acquisition as a significant event for SLB.

The company recently received approval from US regulators to proceed with the acquisition, which included the anticipated divestiture of the US Synthetic drill bit insert business. However, the regulatory process in Norway is undergoing a second review, causing some delays, although Mackey considers this a relatively minor issue. UK regulators have set March 27 as the deadline for their review, which, in conjunction with the Norwegian review, could push the acquisition’s closing to early May.

Mackey also provided insights into the company’s financials, stating that RBC Capital has lowered its Q1 EBITDA forecast for SLB by 1% to $2.036 billion and EPS from $0.78 to $0.74 due to marginally lower margins. The annual EBITDA estimate has been reduced by 2% to $9.231 billion, factoring in a slightly delayed CHX closing and decreased activity in Reservoir Performance and Well Construction, attributed to market softness in Saudi Arabia, West Africa, and Mexico. Despite these adjustments, InvestingPro data shows strong revenue growth of 9.52% and a moderate P/E ratio of 13.1. For detailed analysis and additional insights, including 8 more exclusive ProTips, check out the comprehensive Pro Research Report available on InvestingPro.

In other recent news, SLB has been actively restructuring its business, including workforce reductions, as it implements a new global functional structure aimed at cost savings. The company has recorded $237 million in severance charges for 2024, reflecting its ongoing restructuring efforts. Additionally, SLB Capturi, a joint venture with Aker Solutions, secured a contract for a carbon capture project in Oslo, Norway, valued between $223.3 million and $357.3 million. The project involves delivering a carbon-capture plant and related facilities, set to begin in 2025.

Stifel analysts have maintained a Buy rating on SLB, highlighting its strong fourth-quarter performance and favorable outlook for 2025, suggesting robust free cash flow will support share buybacks and increased dividends. TD Cowen also raised SLB’s price target from $53 to $55, citing the company’s better-than-expected first-quarter performance and guidance for 2025. Benchmark analysts reiterated a Buy rating with a $60 price target, noting the potential of SLB’s Digital business, which includes Cloud services and AI, to significantly increase revenue.

These developments come amid SLB’s plans to accelerate a $2.3 billion share repurchase program and increase its dividend by 3.6%, with new reporting segments expected in its first quarter 2025 earnings report. The company aims to expand its digital platform’s customer base and user count significantly, which analysts believe could amplify its digital revenue substantially.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.