Deutsche Bank Says The 'New' Weatherford International Is Still A Top Pick

Mike Urban of Deutsche Bank reiterated his Buy rating on Weatherford International Plc WFT after the company appointed Halliburton Company HAL executive Mark McCollum as CEO.

Urban, despite liking myriad changes and improved focus at Weatherford, have always argued that fresh leadership was needed to take these efforts to the next level.

What McCollum Means For Weatherford's Future

“In its core businesses, WFT enjoys a market leadership and a global footprint. It has lacked discipline and focus, especially from a returns perspective, in our view, while these qualities were (are) the hallmark of HAL during Mr. McCollum's tenure,” Urban wrote in a note.

Urban noted that McCollum was one of the primary architects of Halliburton's transition from a US centric pressure pumper to a globally diversified market leader. Under his tenure, Halliburton have grown share internationally, narrowed the margin gap with the market leader and delivered strong returns.

With the appointment of McCollum, Weatherford should better execute with a renewed focus on cost discipline, triggering hopes of materially higher margins through the next cycle.

“As the recovery accelerates, operationally and financially leveraged names like WFT should outperform. As we see it, longer-term, improved returns and cash generation will be key to its survival,” Urban added.

Analyst Commentary

As such, Weatherford remains the analyst’s Top Pick.

At last check, shares of Weatherford climbed 12.90 percent to $6.65. Urban has a price target of $8.

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