UPDATE: BMO Capital Markets Reduces Weatherford PT to $14, Recommends Market Perform
In a report published Tuesday, BMO Capital Markets reduced its price target on Weatherford International Ltd. (NYSE: WFT) from $18 to $14 citing accounting challenges, and recommended a Market Perform rating.
BMO Capital Markets noted, "It'll be difficult to get a clear picture of WFT's operational progress/execution until the tax dust settles. One plus was its relative NA strength that provided a differentiated result in a market that plagued peers. In contrast, international results continued to be confounded by accounting and execution difficulties. Management's attempt at a mea culpa came across as a hollow confession and is unlikely to resonate with investors that will need tangible results, not more promises. Shifting priorities from growth to one focused on returns, stringent capital allocation may be easier said than accomplished. Moreover, it is not just financial/operational machinations that overhang the stock. Investor confidence is low and an even greater issue. In other industries WFT's myriad of issues would probably have resulted in more than just a CFO change and potential activist interest. The question of whether more changes to corporate governance is required to restore confidence seems valid. Board level changes whether activist driven or through normal turnover can be a catalyst for broader changes (e.g., NBR). We wouldn't be surprised if some investors seek additional changes this spring. Scanning proxies over the last few years it would seem this initiative may already has some momentum. While WFT's long-term potential is not lost on us, near term it truly seems like dead money."
Weatherford International closed at $9.15 on Tuesday.
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Tags: BMO Capital Markets