BUZZ-Street View: Smooth-sailing for SLB despite weaker oil macro

Reuters2024-10-21

** Top U.S. oilfield services firm SLB posted a 13% rise in Q3 profit, but warned of muted revenue growth in Q4 on producers tightening budgets amid weaker oil market

** That dragged the stock down to close at $41.92 on Friday vs 30 analysts' median PT of $60, per LSEG data

MACRO WEIGHS BUT LONGER-TERM OUTLOOK BRIGHT

** RBC ("outperform", cuts PT to $61 from $67) says despite the macro view, SLB is executing well on what's in its control such as digital growth, margin expansion, FCF returns

** Raymond James ("outperform"; cuts PT to $57 from $59) says Q4 revenue should be modestly higher, by 3%-4%, with some positive impact on margins

** Evercore ("outperform"; PT $62) acknowledges industry's cyclicality, but believes SLB's techleadership, advantageous geographic and product line exposure should "command a higher multiple on both an absolute and relative basis"

** Stifel ("buy"; cuts PT $60 from $62) expects ChampionX deal to particularly benefit SLB's offshore business

** Barclays ("overweight"; cuts PT to $61 from $63), though, expects SLB's shares to trade in line with oil until the deal closes in Q1, which will reset estimates and potentially re-rate the digital business

** Still, it lowers its estimates due to slowing spending cycle in 2025

(Reporting by Seher Dareen in Bengaluru)

((Seher.Dareen@thomsonreuters.com;))

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