SLB stock rating reiterated as overweight by JPMorgan amid Q2 update

Investing.com - JPMorgan has reiterated its overweight rating on SLB (NYSE:SLB) following the company’s second-quarter operational update. According to InvestingPro data, SLB is currently trading near $33.50, significantly below its 52-week high of $50.94, suggesting potential upside opportunity.

The investment firm maintained its positive stance on the oilfield services giant after SLB’s CEO Olivier Le Peuch addressed macroeconomic uncertainty and provided details on the company’s performance. This aligns with the broader analyst consensus, as SLB maintains a strong "Buy" recommendation with an average price target suggesting 37% upside potential.

According to JPMorgan, SLB’s second-quarter update implies approximately $2.02 billion in EBITDA, representing a 3% decrease compared to JPMorgan’s estimate of $2.07 billion.

The firm attributed the lower-than-expected EBITDA to what it described as "an unfavorable activity mix" during the quarter.

JPMorgan expects a "relatively neutral" market reaction to SLB’s update, suggesting investors had largely anticipated the mixed operational results amid the current uncertain macroeconomic environment. The company has demonstrated resilience through consistent dividend payments, maintaining them for 55 consecutive years, and management’s aggressive share buyback program continues to show confidence in the business outlook.

In other recent news, SLB has reported its Q1 2025 financial results, showing earnings per share (EPS) of $0.72, which fell short of the anticipated $0.74. The company’s revenue for the quarter was $8.49 billion, missing the forecasted $8.64 billion. Despite these results, Stifel analysts have maintained a Buy rating on SLB, although they lowered the stock’s price target from $58 to $54, citing the company’s strong free cash flow and commitment to shareholder returns. In another development, SLB has secured a significant engineering, procurement, construction, and installation (EPCI) contract for the Ginger project offshore Trinidad and Tobago, awarded by bp to SLB’s OneSubsea joint venture and Subsea7.

Additionally, SLB has launched Electris™, a new portfolio of digitally enabled electric well completions technologies, aimed at improving production and reducing costs. This innovation has already seen over 100 installations in five countries, including an offshore application in Norway. The company’s advancements in digital solutions and energy innovation continue to be a focal point, as seen in the 17% year-on-year growth in digital revenue. These developments reflect SLB’s strategic focus on leveraging digital capabilities and optimizing production systems amidst a challenging market environment.

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