TD Cowen has adjusted its outlook on Schlumberger Limited (NYSE: NYSE:SLB), a leading oilfield services company.
The firm's analyst reduced the price target on the company's shares to $65.00, down from the previous $68.00, while keeping a Buy rating on the stock.
The decision came after Schlumberger underperformed its large-cap oilfield services (LC OFS) peers by more than 200 basis points on a day that saw the entire sector decline.
The company provided guidance for its fourth-quarter EBITDA (earnings before interest, taxes, depreciation, and amortization) which was approximately 5% below the consensus estimates.
Additionally, Schlumberger offered a high-level outlook for 2025 that suggested a similar downside to the company's standalone estimates.
In other recent news, Schlumberger Limited (SLB) reported third-quarter adjusted earnings per share at $0.89, with EBITDA at $2.34 billion, and free cash flow (FCF) of $1.8 billion. Susquehanna maintained a positive rating on the company's shares, albeit with a lower target due to updated estimates. Analysts from Stifel, Citi, Raymond James, and Goldman Sachs (NYSE:GS) also revised their price targets for SLB, while maintaining their respective ratings.
SLB's revenue for the third quarter came in at $9.2 billion, driven by an increase in digital sales within the Digital & Integration division, despite a decline in Well Construction revenue. The company also repurchased over $500 million worth of shares in the third quarter, reflecting its commitment to shareholder returns.
Recent developments also include SLB's anticipated sale of the Palliser property in Canada, which is expected to help the company exceed its return targets, with projections now set to surpass the $3.0 billion mark in 2024 and its $4.0 billion target in 2025.
InvestingPro Insights
To complement TD Cowen's analysis, InvestingPro data offers additional insights into Schlumberger's financial position. The company's market capitalization stands at $59.19 billion, with a P/E ratio of 13.48, indicating a relatively modest valuation compared to its earnings. This aligns with the analyst's maintained Buy rating despite the lowered price target.
InvestingPro Tips highlight Schlumberger's financial stability and shareholder-friendly policies. The company has maintained dividend payments for 54 consecutive years and has raised its dividend for 3 consecutive years. This consistent dividend history, coupled with a current dividend yield of 2.62%, may appeal to income-focused investors, especially in light of the recent stock price decline.
Furthermore, Schlumberger's revenue growth of 12.4% over the last twelve months and an EBITDA growth of 15.76% demonstrate the company's ability to expand its business despite industry challenges. These growth figures provide context to the analyst's optimism and the maintained Buy rating.
For investors seeking a deeper understanding of Schlumberger's prospects, InvestingPro offers 7 additional tips, which could provide valuable insights into the company's potential in the current market environment.
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