On Tuesday, Benchmark analysts maintained a positive stance on shares of SLB (NYSE: SLB), reiterating a Buy rating and a $60.00 price target for the oilfield services company. The analysts highlighted a significant uptick in the stock’s value, which saw a 7% increase, attributing the rise to a better-than-anticipated outlook.
With a perfect Piotroski Score of 9 and "GREAT" financial health rating according to InvestingPro, SLB’s forecast for 2025 suggests stable year-over-year revenue with EBITDA expected to meet or exceed the current $9.2 billion figure.
SLB announced an increase in its dividend by 3.6% and an acceleration of its $2.3 billion share repurchase program, which is now set to be completed in the first half of 2025. Notably, the company has maintained dividend payments for 55 consecutive years, demonstrating remarkable financial stability.
The company also plans to unveil new reporting segments with its first quarter 2025 earnings report, providing investors with a detailed view of its burgeoning and profitable Digital business, which includes Cloud services, Artificial Intelligence, and Automation. InvestingPro analysis suggests SLB is currently trading below its Fair Value, making it an interesting opportunity for value investors.
The Benchmark analysts believe that the company’s Digital business holds considerable valuation upside, noting that the market currently does not seem to recognize its value. They drew a comparison with Palantir (NASDAQ:PLTR), which has a similar revenue and EBITDA profile but trades at a significantly higher EV/EBITDA multiple. SLB’s Digital business is currently trading at under 7x EV/EBITDA, while Palantir trades at 70x EV/EBITDA.
Looking ahead, SLB aims to significantly expand its digital platform’s customer base to 1,500 and its user count to over 100,000, a substantial increase from the current 300 customers and 6,000 users. Benchmark analysts estimate that, depending on the adoption rate and intensity, SLB’s market opportunity could potentially amplify its digital revenue by four to ten times.
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