Schlumberger (SLB) Stock Forecast for 2024, 2025, 2026. Sell or Buy?

Renowned for his well-informed financial insights, Rob Barnett delivers yet another compelling analysis in his latest article. With 67 publications since 2018, Barnett demonstrates consistent dedication to the field, averaging over 13 articles per year—a testament to his active engagement and expertise. Backed by a significant following of nearly 2,700 subscribers, his viewpoints resonate strongly within the financial community. Notably, his credibility is ranked within the upper echelons, marking his opinions as both reliable and influential. In this piece, Barnett asserts a "No" stance on SLB stock, aligning with his reputation for decisive, data-driven evaluations. Readers can expect a balanced, informed perspective, underscoring why he remains a respected voice in the financial analysis sphere.

Key Theses of the Review

• Schlumberger's stock price is highly influenced by oil prices, with 80% of revenues projected from oil prices 15 months prior, making valuation a challenge.
• SLB has a history of overpaying for acquisitions, causing asset write-downs and providing poor returns for long-term investors.
• Despite being an asset-intensive business, SLB’s current valuation is comparatively cheap relative to its intrinsic value.
• Insider trading in SLB suggests concerns about overvaluation, but the potential upside due to a recovery in oil prices justifies a BUY rating.

Key Factors Influencing SLB's Stock Price

With 80% of SLB's revenues reliant on historical oil prices 15 months prior, oil price fluctuations directly affect the company's financial performance and stock price. Rising oil prices could drive SLB’s revenues higher, making this factor critically significant in the near term.

SLB's history of overpaying for acquisitions has resulted in asset write-downs, which harm investor confidence and suppress the stock price. This factor remains significant, though less immediate compared to oil price fluctuations.

The current low valuation of SLB relative to its intrinsic value provides room for significant upside potential if market sentiment improves. This factor is a strong driver for stock price appreciation in case oil prices recover or investor confidence increases.

The suggestion of overvaluation from insider trades raises caution amongst investors, potentially suppressing demand for the stock. However, this factor has a moderate impact compared to broader market conditions like oil price trends.

Commentary

Schlumberger’s stock price trajectory hinges on a blend of factors, with oil prices playing a dominant role in the short and medium term. The company’s revenues are tightly correlated with oil prices from 15 months prior, making this an essential driver of performance. Coupled with SLB's current low valuation relative to its intrinsic value, any recovery in oil prices could catalyze significant upward momentum. However, potential caution arises from recent insider trading activity, possibly signaling overvaluation concerns, which could dampen sentiment if oil prices fail to strengthen.

Over the next 15 days, the average influence strength of these factors points to a moderate upward pressure, mainly driven by oil price recovery expectations. Looking further into the next month, this influence becomes slightly stronger, given growing optimism surrounding market fundamentals and the appeal of SLB’s discounted valuation. While SLB needs to address its history of overpaying for acquisitions to rebuild long-term investor confidence, the current setup presents an opportunity for short to medium-term gains if external leverages like oil trends align favorably.

Mark Van Mater’s recent analytical piece on SLB stock offers a compelling insight, grounded in his maintained “No” stance on the stock’s potential. With 26 publications since 2022 and a growing base of 391 subscribers, Van Mater’s body of work has steadily gained attention, reflecting an active and engaged contribution to financial discourse. While his credibility may fall within a developing range, his consistency in publishing insightful analyses over a relatively short tenure demonstrates a solid commitment to providing value to his audience. Readers can expect measured, data-driven perspectives backed by a steadily expanding influence. This piece, tackling SLB, aligns with his track record of analytical rigor and positions itself as a useful reference for investors weighing the stock’s current trajectory and prospects.

Key Theses of the Schlumberger (SLB) Review

• Schlumberger is currently undervalued compared to its historical P/E ratios and forecasted EPS, presenting a potential annualized return of 20.5% when including covered calls and dividends.
• The company's Digital & Integration division has shown notable improvements, achieving record revenue levels and driving 50 basis point EBITDA growth.
• There are risks to consider, such as volatile oil prices, potential oversupply, weak demand in China, customer capex cutbacks, and currency fluctuations.
• Using covered call strategies on SLB stocks can mitigate risks and generate returns even in a stagnant market, with analysts forecasting up to a 57% upside.

Key Factors Influencing Schlumberger (SLB) Stock Price

The division's record revenue and 50 basis point improvement in EBITDA directly enhance profitability, making it a strong growth driver for the company. This performance improvement signals operational efficiencies and innovation, which are likely to attract investors.

Oil prices directly drive demand for oilfield services; fluctuations affect Schlumberger’s revenue significantly. In a strong oil price scenario, increased exploration and drilling activities fuel service demand, while weak prices lead to cutbacks.

Excess oil supply in the market could limit drilling and exploration activities, thereby reducing demand for Schlumberger's services. This factor is closely tied to geopolitical and market dynamics, hence moderately impactful.

China is a major consumer of energy, and weaker demand can lead to reduced exploration budgets globally. However, this factor is likely to have a more regional and moderate impact compared to oil price volatility.

Cutbacks in customer capex directly impact Schlumberger’s business, as fewer funds lead to a reduction in exploration and production projects. With continued uncertainty in the macroeconomic environment, this factor poses a significant risk.

SLB’s global footprint makes it vulnerable to foreign exchange volatility, especially with a diverse revenue base. While impactful, its influence on stock price is limited compared to fundamental market demand and oil price changes.

Commentary

Schlumberger seems positioned as an attractive investment due to its undervaluation, improving Digital & Integration division performance, and the potential for solid returns through a covered call strategy. With record-breaking revenue and stronger EBITDA, the company’s operational efficiency is a vital advantage. Additionally, the projected annualized return of 20.5% underscores its potential to outpace market expectations. However, ongoing risks such as volatile oil prices, customer capex pullbacks, and global demand uncertainties keep investors on edge.

By averaging the significance ratings of key factors, the stock's trend appears moderately influenced, scoring a 7.5 on a scale of 10. In the next 15 days, this suggests short-term volatility, but over the next month, the impact may even out as macroeconomic factors—like oil prices and customer spending—settle. Although challenges remain, the undervaluation and strategic strengths make Schlumberger a tempting hold for those seeking long-term value with manageable risk.