Oilfield services company SLB (SLB) is scheduled to announce its third-quarter results on October 18. SLB has a solid track record of exceeding analysts’ earnings expectations for 15 consecutive quarters. Despite the weakness in SLB’s North American business and near-term challenges, Wall Street is bullish about the company’s international business and long-term prospects.
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Expectations from SLB’s Q3 Results
SLB exceeded analysts’ revenue and earnings expectations in the second quarter, as the company’s international business helped offset the weakness in the North American region. Regarding the second-half expectations, the company expressed confidence in the continued momentum in its international markets and solid digital sales. The company stated that it expects its cost-efficiency program to expand margins and help achieve full-year adjusted EBITDA growth in the mid-teens.
Analysts expect the company’s Q3 EPS to grow 15.4% year-over-year to $0.90 and revenue to increase 12% to $9.31 billion.
Analysts’ Comments Ahead of Q3 Results
Ahead of the results, Stifel analyst Stephen Gengaro lowered his price target for SLB stock to $62 from $65 and reiterated a Buy rating. Gengaro reduced his projections for U.S. activity in the second half of 2024 and 2025 and modestly scaled back 2025 international growth expectations.
The analyst reduced his estimates for oilfield services companies that he covers, as he expects flat U.S. activity through 2025. Aside from solid free cash flow and shareholder returns, the analyst sees “limited near-term catalysts” for stocks in the oilfield services space.
Similarly, BMO Capital analyst Phillip Jungwirth lowered the price target for SLB to $58 from $60 and reiterated a Buy rating on the stock as part of a broader research note on the upcoming Q3 earnings of Oilfield Services and Refining companies. He is positive on SLB’s higher EBITDA and free cash flow margin profile, fueled by the company’s technology and international dominance. He also pointed out that SLB stock is trading way below its historical valuation.
Options Traders Anticipate More than 3% Stock Movement
Using TipRanks’ Options tool, we can see what options traders are expecting from the stock immediately after its earnings report. The expected earnings move is determined by calculating the at-the-money straddle of the options closest to expiration after the earnings announcement. As per the tool, options traders are expecting a 3.34% move in either direction in SLB stock.
Is SLB a Good Stock to Buy?
SLB stock scores a Strong Buy consensus rating based on 14 Buys versus one Hold recommendation. The average SLB stock price target of $65.39 implies nearly 50% upside potential. Shares are down 16% year-to-date.
