On Friday, Citi downgraded Nabors Industries Ltd. (NYSE:NBR) stock from Buy to Neutral, adjusting its price target to $75 from $110. This shift reflects a more conservative outlook on the company's financial performance, particularly concerning its EBITDA and FCF for the year 2025.
Citi's revised forecasts for Nabors indicate a 2025 EBITDA of $934 million, 5% lower than the consensus, with a FCF of $90 million, more than 50% below the consensus. These projections are based on an anticipated average of 71 active rigs in the Lower 48 states, with an average daily margin of $13,200.
The new price target of $75 is based on three times the company's projected 2025 EBITDA, slightly below historical averages. This adjustment is deemed appropriate due to high debt levels and limited FCF expected in the near term.
Additionally, Citi has lowered its forecast for Nabors' EBITDA in fiscal year 2026 by 4% to $1.01 billion, 8% below the consensus. These downgrades suggest a more cautious view of Nabors' financial health and market position in the coming years.
In other news, Nabors Industries reported a strong second quarter in 2024, with total adjusted EBITDA surpassing expectations despite a decline in the US rig count. Revenue growth in international operations and debt reduction were also notable achievements.
InvestingPro Insights
According to InvestingPro data, Nabors faces challenges with negative P/E ratios and declining revenue growth. Analysts have revised earnings estimates downwards, and the stock price has experienced significant volatility.
Investors should carefully consider these factors before making any investment decisions regarding Nabors Industries.
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