Weatherford International (WFT) Message Board

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Gold/Mining/Energy : Weatherford International (WFT)

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From: Dennis Roth	10/24/2007 8:38:52 AM
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Weatherford International Ltd. (WFT): Bullish international guidance driving 2009E EPS increase - Goldman Sachs - 10/23/07 What's changed We are lowering our 2007/2008 EPS forecasts by $0.05/$0.10 to $3.27/$4.34. We are raising our 2009 EPS forecast by $0.55 to $5.69. Our 12-month price target is unchanged. Implications We remain bullish on Weatherford International and continue to believe it is one of the best-positioned companies to capitalize on secular trends toward international growth and rising demand for highly technical services. Key takeaways from 3Q2007 include: (1) A bullish outlook for international growth, which includes 25%-plus revenue growth in Latin America through 2009 and 40%-plus growth from the Eastern Hemisphere through 2009. Weatherford has little market share in a number of international markets, yet it has a strong "toolbox" of directional drilling and wireline capabilities to gain traction. (2) We were impressed with the company's ability to improve operating efficiencies in Canada. We expect to see further operating efficiencies in the US market through 2008. (3) Market-share gains in the US from directional, wireline, ESP, and chemicals allowed Weatherford to post a solid 4% revenue growth in NAM despite a 3.4% decline in the rig count. Weatherford's outlook on North America appears to be less pessimistic than peers, likely because it anticipates market-share gains and growth in high-margin businesses off a low base, which is much more challenging for larger competitors. Valuation There is no change to our 12-month price target on Weatherford of $77 (12.3X 2008E EV/DACF). The shares are trading at 2008E EV-DACF/P-E of 10.0X/14.2X, which is below the peer averages of 12.3X/15.3X. Key risks Key risks include capacity additions, a sustained decline in commodity prices, and the broader stock market indices.

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