SLB Earnings Beat
SLB Exceeds Second-Quarter Estimates, Prompting Analysts to Raise Price Targets
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Key Points
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Morgan Stanley maintains an overweight rating on SLB and raises its price target to 55 per share.
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Evercore ISI Group keeps its outperform rating on SLB and increases its price target to 66.
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SLB’s Q2 results beat expectations with an adjusted EPS of 55 cents and revenue of $8.972 billion, topping the consensus of 51 cents and $8.672 billion.
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Analysts moved their SLB forecasts higher after the earnings release, with multiple firms adjusting price targets upward.
SLB posted a stronger-than-expected second quarter, reporting adjusted earnings per share of 55 cents and revenue of $8.972 billion — beating the consensus of 51 cents and $8.672 billion, respectively, according to Benzinga. Revenue climbed 5% year over year, and analysts at multiple Wall Street firms quickly raised their price targets after the results came in.
The stock edged slightly lower to around $52.36 as investors weighed the results. But the broader analyst reaction was upbeat, with firms including Morgan Stanley, Evercore ISI, Piper Sandler, and TD Cowen all moving their targets higher.
Q2 Numbers Top Wall Street on Every Key Metric
SLB's adjusted EPS of 55 cents cleared the 51-cent analyst estimate by a solid margin, Benzinga reported. Revenue of $8.972 billion also surpassed the $8.672 billion consensus. That 5% year-over-year revenue growth gives the company momentum heading into the back half of the year.
Management offered a confident third-quarter outlook. They guided for revenue to grow 3% to 4% sequentially. They also projected adjusted EBITDA margin — a measure of core profitability — to expand by about 75 basis points in Q3.
SLB Eyes $10 Billion Quarter by Year-End
The company set an ambitious full-year target. SLB expects fourth-quarter revenue to top $10 billion, with an adjusted EBITDA margin near 24%. That would mark a significant step up from the current $8.972 billion quarterly run rate. The target assumes the Middle East business continues to recover, according to Benzinga.
The EBITDA margin target of 24% signals that SLB expects not just more revenue, but more profitable revenue. EBITDA margin measures how much profit a company keeps from each dollar of sales before interest, taxes, and other costs.
Middle East Escalation Could Dent Q3 by $150 Million
One risk clouds the near-term picture. A renewed Middle East escalation could cut SLB's Q3 revenue by roughly $150 million and EBITDA by about $75 million, Benzinga reported. The impact would hit mainly two business lines: Well Construction and Reservoir Performance.
Well Construction involves drilling new oil and gas wells. Reservoir Performance covers services that help existing wells produce more oil. Both are active businesses in the Middle East, making them vulnerable to any regional disruption.
Morgan Stanley, Evercore, and Others Lift Price Targets
Wall Street wasted no time updating its views. Morgan Stanley kept its overweight rating and raised its price target to $55 per share, Benzinga reported. Evercore ISI held its outperform rating and lifted its target to $66. Both firms see more upside ahead despite the stock trading near $52.
Piper Sandler also maintained its overweight rating and raised its target to $64, Benzinga noted. TD Cowen held its buy rating and matched that $64 target. The broad consensus across firms: SLB's beat was real, and the outlook warrants higher valuations.
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