Weatherford International Initiated With 11% Upside At Imperial Capital

Although Weatherford International Plc WFT has addressed concerns over liquidity with its recent financing activity and the macro outlook seems to be improving, a fundamental uptick still remains to be seen, Imperial Capital’s Scott Levine said in a report. He initiated coverage of the company with an In-Line rating and a price target of $7.

While excessive liquidity concerns have been alleviated and commodity price trends seem to be stabilizing, “we await more evidence of fundamental improvement in earnings and cash flows to become more positive, and see more favorable risk-reward tradeoffs elsewhere within our energy coverage universe,” analyst Scott Levine wrote.

High Leverage To Potential E&P Recovery

Weatherford International has substantial leverage to a potential recovery in E&P activity. Levine noted that a recovery seems to be “increasingly likely,” following a slump of about two years, given the recent stabilization in commodity prices as well as early signs of an upturn in rig count.

“WFT has a diversified business mix that includes healthy exposure to the onshore market, and a leading position within select businesses such as artificial lift and fishing and rental services, suggesting it should participate meaningfully early in the recovery,” the analyst stated.