Pros Outweigh Cons In Weatherford's First Quarter Under New CEO; Loop Capital Upgrades

Loop Capital upgraded Weatherford International Plc WFT to Buy from Hold following increased confidence in new CEO Krishna Shivram’s vision to restore profitability at the company.

Justification For Upgrade

Shivram’s plan includes reducing debt to below $3 billion over the next four years, positioning the company as specialists in well construction and creating new sales channels.

“While we have heard positive rhetoric out of WFT before, the combination of solid detail behind the initiatives and increased confidence in leadership give us optimism that the company is headed in the right direction,” analyst Stephen Gengaro wrote in a note.

Among the positives in the fourth-quarter results, Weatherford reported smaller-than-expected loss amid better performance in North America and Middle East, improved margins in North America, $300 million expected cost savings, positive adjusted free cash flow and CEO’s new strategic plan.

Things To Keep In Mind

On the other hand, the negatives include lackluster results in Latin America, free cash flow remains a worry, international sales and high debt levels.

As the positives outnumber the negatives, Gengaro raised his price target to $8 from $7.

At last check, shares of Weatherford had risen 6.40 percent to $6.15.