Analysts Make Big Changes on Weatherford

Oil field services company Weatherford International PLC (NYSE: WFT) reported a wider-than-expected net loss and lower-than-expected revenues on Thursday, and the stock posted a decline of about 17% for the day.

If there was any good news for Weatherford’s first quarter it was that the company was able to achieve a better financial footing. The company raised $630 million with a new equity offering in the quarter and said on Thursday that it had successfully negotiated an amended and restated credit agreement and a term loan agreement totaling $1.651 billion, including a $500 million term loan and a $1.151 billion revolving credit facility. The term loan matures in July 2020 and the revolving credit facility matures in July 2019.

The financial maneuvering was received positively by analysts at Credit Suisse, who rate the stock Outperform:

Faith, Hope and Prayer – Use Them All; Lowering Estimates and Target Price to $10 (from $13). … WFT laid out a detailed and credible roadmap of how it was going to survive but it demonstrated how brutal this down-cycle is and the financial damage that has been and is being done. The stock performance demonstrated the concerns with high leverage, even if the liquidity path looks navigable, with the stock trading down 25% versus a flat [VanEck Vectors Oil Services ETF] OIH. Investors question WFT’s solvency. We believe the reaction is overdone.

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S&P Global was not impressed:

WFT is eschewing further job cuts in North America on the premise that it will enable it to offer better response time when oil services fundamentals improve, but we remain wary on recovery timing.

The firm maintained its Sell rating and cut the 12-month price target to $5 a share.

Other analysts also weighed in:

• Goldman Sachs cut its price target from $9 to $7.75.
• Seaport Global Securities lowered its price target to $7.00 and raised its rating from Neutral to Buy.
• Susquehanna cut its price target from $9 to $8 with a Positive rating.
• UBS trimmed its price target from $11 to $10 and has a Buy rating on the stock.
• Wells Fargo cut its rating from Outperform to Market Perform.

The stock closed on Friday at $5.67, flat for the day, in a 52-week range of $4.95 to $14.90. The consensus price target on the stock is $9.23, but it likely does not include all recent changes.