Rothschild Redburn initiates SLB stock with Buy rating on business reshaping

Investing.com - Rothschild Redburn initiated coverage on SLB (NYSE:SLB) with a Buy rating and a $48.00 price target, implying a potential 35% total shareholder return over the next 12 months. This aligns with the broader analyst sentiment, as InvestingPro data shows SLB has a strong buy consensus rating of 1.45, with analyst targets ranging from $36 to $62. The stock currently trades at $36.06, suggesting significant upside potential, and appears undervalued according to InvestingPro’s Fair Value model.

The research firm noted that SLB shares have experienced significant derating, with the two-year forward consensus EV/EBITDA multiple falling from 10.8x in September 2023 to 7.2x currently, approximately 27% below its long-run average. Current InvestingPro metrics show SLB’s EV/EBITDA ratio at 8.14, with the company maintaining a P/E ratio of 14.1 and offering a 3.16% dividend yield.

Rothschild Redburn highlighted that SLB has strategically reshaped its business in recent years by disposing of capital-intensive assets and gaining exposure to less cyclical areas through the acquisition of ChampionX.

The firm’s analysis of SLB’s Production Systems division, the company’s largest segment, supports EBITDA forecasts that are approximately 6-9% ahead of consensus estimates for 2027-28, driven by an expected recovery in the cycle.

Rothschild Redburn identified several potential catalysts for SLB’s stock rerating, including a return to earnings upgrades and rising free cash flow and distributions, with the $48 price target representing a 2027 EV/EBITDA multiple of 7.4x.

In other recent news, SLB reported its financial results for the third quarter of 2025, showing a slight earnings per share (EPS) beat but a revenue miss. The company posted an EPS of $0.69, surpassing the expected $0.68, while revenue came in at $8.9 billion, falling short of the anticipated $8.97 billion. Additionally, SLB has secured two engineering, procurement, and construction contracts from PTTEP for its OneSubsea joint venture, which covers subsea production systems for offshore Malaysian fields. In the realm of analyst ratings, UBS reiterated its Buy rating on SLB with a price target of $44. UBS expressed a positive outlook despite macroeconomic concerns and weakening oil prices, noting SLB largely reiterated its fourth-quarter 2025 outlook. These developments reflect SLB’s ongoing activities and market positioning.

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