Schlumberger's Margin Resilience: Analyst Highlights Digital & Production Strength Despite Price Cut

Stifel analyst Stephen Gengaro slashed the price forecast for Schlumberger SLB from $58.00 to $54.00 while reaffirming a Buy rating.

On April 25, the company reported a 3% year-over-year decline in first-quarter 2025 revenue to $8.49 billion, missing estimates of $8.59 billion and adjusted EPS of 72 cents, which fell short of the consensus of 74 cents.

The analyst writes that despite the current macroeconomic uncertainty, the company’s margin performance is likely aided by its Digital business, the strength of its Production Systems segment, and ongoing cost reduction initiatives.

SLB has reaffirmed its expectation for strong free cash flow (FCF) and its commitment to returning at least $4 billion to shareholders in 2025, notes the analyst.

The analyst slashed EBITDA estimates to $8.38 billion (from $8.94 billion) for 2025 and $9.08 billion (from $9.75 billion) for 2026.

Overall, Gengaro expects the company’s strong FCF margin (10%+ expected through 2025) and low leverage to provide financial flexibility.

Also, the ChampionX acquisition is projected to benefit customers (especially offshore) and increase SLB’s exposure to resilient production/recovery markets, adds the analyst.

Investors can gain exposure to the stock via iShares U.S. Oil Equipment & Services ETF IEZ and VanEck Oil Services ETF OIH.

Price Action: SLB shares are down 1.52% at $33.99 at the last check Monday.

Read Next:

• Texas-Based Baker Hughes Warns Of $100-$200 Million EBITDA Risk From Tariffs In 2025

Photo: Shutterstock