Citi reiterates buy rating on Weatherford International with $115 target

Citi analyst Scott Gruber reiterated a Buy rating and a $115.00 price target on Weatherford International plc (NASDAQ: WFRD).

Gruber noted that near-term activity disruptions in Saudi Arabia present a risk to fourth-quarter estimates, with the company expected to provide more details on its third-quarter earnings call.

The analyst cited growth prospects in Latin America, including Venezuela, where Weatherford anticipates revenue contribution in 2027 from intervention and lift operations. Argentina, Colombia, and Brazil were also noted as favorable markets. The analyst pointed to energy security concerns as a driver of projects in Asia and India, while the African offshore market was described as presenting multiple years of growth potential.

Gruber highlighted Weatherford's technology investments in completion equipment as broadening the company's capabilities for offshore work and shale operations. The company has secured initial offshore completion equipment contracts. Weatherford also aims to expand its managed-pressure-drilling (MPD) operations into managed-pressure-wells (MPW).

On the financial side, Gruber noted that Weatherford is implementing a new ERP system over the next year, pushing capital expenditures as a percentage of sales close to 5%, with a forecast of 4.7% for the following year. Management has outlined a path to free cash flow conversion above 50%, up from the high 40s percent range. Gruber indicated that 55% to 60% is possible as margins improve and ERP investment and working capital intensity moderate.

The company is also in the process of domesticating into the United States, which management expects will reduce its tax burden and lower overhead costs.

Shares of Weatherford International closed at $76.90 prior to the announcement.

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