Weatherford Shares Upgraded To Overweight By Simmons

Simmons & Company senior analyst, Bill Herbert, believes that the recent $1 billion convertible offering of Weatherford International plc

redefined the downside risks to the acceptable levels from the possible distressing scenario. As a result, the brokerage upgraded the shares of the company to an Overweight rating from Neutral with a price target of $8.00. That meant there is potential for more than 35 percent upside rewards. Herbert commented, "We are supportive of this transaction as we believe it materially improves the financial resilience of the company and allows management to more fully concentrate on running/improving the operational business as opposed to repeatedly being enveloped, with increasing frequency, by serial crises." Simmons & Company's thesis is a visibly tightening oil market and that should result in methodically enhancing activity in the second half of the current year. The brokerage expects the pace of activity improvement accelerating over the ensuing two years as the call on OPEC rises materially. Therefore, WFT's shares should avail the above average appreciation potential due to its current prostrated condition and the company's above average exposure to enhancing global onshore activity. The brokerage believes that the convert represented the final equity/hybrid issuance on the part of Weatherford for the foreseeable future as their 2018 and 2019 maturities would have been redeemed. The analyst also expects additional debt refinancing to be forthcoming to offer additional financial flexibility for the company. Herbert added, "We believe the recently upgraded management team, while likely to endure some near-term integration teething pains, has the potential to materially improve upon an erratic operational legacy…. Additionally, the outlook for oil prices and continued beleaguered E&P capital spending is an additional industry risk." On Friday, the stock traded 5.77 percent higher.