UPDATE: Citi Downgrades Core Laboratories (CLB) to Sell on Lofty Valuation, Slow Margin Recovery

June 14, 2021 4:17 AM EDT
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Price: $33.09 -4.06%

Rating Summary:
    10 Buy, 15 Hold, 5 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 18 | Down: 12 | New: 23
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(Updated - June 14, 2021 5:31 AM EDT)

Citi analyst Scott Gruber downgraded Core Laboratories (NYSE: CLB) from Neutral to Sell with a price target of $36.00 (from $30.00).

The analyst comments "We downgrade CLB to Sell and see ~25% downside to our new TP of $36, equivalent to almost a 4.5% yield on our forecast 2022 FCF. CLB's stock is up 80% YTD, having outperformed all of its SMID cap peers and large cap names under our coverage. Yet the outperformance, especially of late, appears overdone as the stock currently trades at one of the lowest 2022 FCF yield within OFS, at ~3.3%. This is within the normal range of CLB historically but we struggle to view such a low yield, both absolute and relative, as still appropriate given a lack of differentiated growth. Thus, we are downgrading CLB to sell on the expectation for near term multiple compression given the catalyst for a weaker than consensus expected 2q21 earnings print and continued modest incrementals in 3q as costs normalize. We initiate a negative catalyst watch into earnings as a result."

For an analyst ratings summary and ratings history on Core Laboratories click here. For more ratings news on Core Laboratories click here.

Shares of Core Laboratories closed at $47.81 yesterday.

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