News Digest / Analysis & Ideas / SLB Q4 2024 Earnings Preview: Key Numbers and Analyst Insights

SLB Q4 2024 Earnings Preview: Key Numbers and Analyst Insights

Alex Vellor
07:32am, Thursday, Jan 16, 2025
Photo by Sherzod Max on Unsplash.com

Schlumberger (NYSE:SLB) will report its Q4 2024 earnings on Friday, January 17, amid a tough year for the stock, which has declined nearly 19%. Analysts anticipate modest growth despite challenges in oilfield services.

Earnings Expectations

Wall Street forecasts SLB’s Q4 earnings per share (EPS) to rise by 4.6% year-over-year, reaching $0.90. Revenue is expected to grow 2.1% to $9.18 billion. While this reflects progress, the gains are modest given weak oil prices and restrained spending from both North American and international oil producers.

SLB has cautioned about limited activity in North America and flat spending globally. The international market, typically a key growth driver, remains under pressure, with no significant recovery expected in the short term.

Analysts' Downgrades and Adjustments

Analyst sentiment ahead of the earnings release has been mixed. Evercore ISI’s Stephen Richardson downgraded SLB from Buy to Hold, slashing the price target from $62 to $44. The firm also reduced its 2025 estimates for the oilfield services sector by 10%, citing sluggish growth and restrained capital spending.

Meanwhile, TD Cowen’s Marc Bianchi maintained a Buy rating but lowered his price target from $65 to $53. Bianchi acknowledged challenges in global oilfield services but views SLB as undervalued compared to peers.

Currently, SLB holds a Moderate Buy consensus rating, with 13 analysts recommending Buy and five suggesting Hold. The average price target of $52.69 implies a 30% upside potential from current levels.

Challenges in Oilfield Services

The broader oilfield services sector faces headwinds, including flat exploration and production (E&P) spending in 2024. This trend limits near-term revenue opportunities for companies like SLB, particularly in shorter-cycle businesses. Evercore’s global E&P survey highlights restrained investment, which is reflected in analysts' cautious revisions across the sector.

Investor Takeaways

Traders should monitor the following:

  1. Earnings Growth: Expected EPS of $0.90 marks a 4.6% improvement, but the pace of growth remains slow.
  2. Revenue Projections: Anticipated Q4 revenue of $9.18 billion represents a modest 2.1% growth.
  3. Valuation Potential: Analysts' average price target of $52.69 suggests a significant upside, making SLB a potential value play despite headwinds.

As SLB reports earnings, investors should focus on management’s commentary regarding future activity levels and capital expenditure trends. These insights will help gauge whether the company can navigate sector-wide challenges and deliver long-term growth.

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Alex Vellor

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