Weatherford International (WFT) Message Board

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Gold/Mining/Energy : Weatherford International (WFT)

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From: Dennis Roth	4/26/2007 8:12:50 AM
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Raising estimates and price target - Reiterate Buy - WFT - April 26, 2007 What's changed Weatherford reported strong 1Q2007 results. EPS of $0.82 came in well above our $0.74 and consensus of $0.77. Better than expected earnings are a due to stronger than expected results in North America and a lower than expected tax rate. We are increasing our 2007/2008 EPS forecasts by $0.18/$0.21 to $3.36/$3.94. Implications We reiterate a Buy on Weatherford shares. International growth remains one of our top investment themes and Weatherford’s 1Q2007 performance and 2007 guidance demonstrate that the company continues to execute well. Weatherford has a major opportunity to rapidly expand its presence in the Eastern Hemisphere and Latin America as demonstrated this quarter and we continue to believe that the company does not get enough credit for that. Instead, Weatherford continues to trade at a discount because of its large North American exposure. In 2007, we expect Weatherford’s international revenue to surpass its level of revenue from North America. Valuation Weatherford is trading at a 2007 EV-DACF/P-E of 10.3X/15.4X, versus the peer average of 12.7X/16.2X. We have raised our 12-month price target to $54 (10.7X 2007 EV/DACF) from $50 due to higher estimates. Key risks Key risks to our thesis include: (1) A U.S./Global recession could result in weaker commodity prices and further E&P capex cuts; and (2) Weakness in natural gas prices could lead to further E&P capex cuts in North America.

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