Schlumberger Positioned For Long-Term International Growth As Rig Counts Rise, Says Analyst

Susquehanna analyst Charles P. Minervino reiterated a positive rating on Schlumberger N.V. SLB, raising the price target to $72 from $68. 

The analyst has slightly tempered his 2024 revenue growth expectation to 15% from 17%; however, he raised the EBITDA margin estimates to 25.1% from 24.2%. 

The analyst is bullish on the company's Digital business plan to double its size from $1.5 billion in 2021 to $3 billion by 2025. SLB looks to achieve this through its two distinct but interconnected digital platforms for 1) workflow and 2) Data and AI. 

Minervino highlights that SLB has already achieved 60% CAGR for platform revenue from 2021 through 2023, which positions the company to continue growing its digital customer base.

The analyst adds that the company will also accelerate the development of new customer solutions, enhancing its core businesses.

Coming to SLB's partnership with TDA Research to accelerate the development of carbon capture technology, the analyst thinks it highlights SLB's focus on developing new energy technologies, providing revenue outside the traditional oil and gas cycle. 

Minervino believes the company's multi-year international growth story remains intact as land and offshore rig counts are expected to rise, production capacity expands, and more exploration takes place. 

SLB's technology will be a differentiator and place the company firmly as a primary beneficiary of the spending cycle, adds the analyst. 

Minervino's latest 2023/2024 revenue estimates are $33.0 billion/$38.0 billion (prior view: $33 billion/$38.6 billion, respectively).

The analyst's 2023/2024 EBITDA estimates are $8.03 billion/$9.53 billion (prior view: $8.01 billion/$9.35 billion, respectively).

Price Action: SLB shares are trading lower by 0.08% to $60.95 on the last check Thursday.