Wells Fargo downgrades SLB to Equal Weight, lowers price target to $53

As previously reported, Wells Fargo analyst Roger Read downgraded SLB (SLB) to Equal Weight from Overweight with a price target of $53, down from $68. The firm views SLB’s acquisition of ChampionX (CHX) as modestly accretive to earnings but dilutive to overall valuation and margins. Wells also considers the Aker JV acquisition, which closed in early Q4 2023, as delivering a similar but more modest dilutive effect given its considerably smaller size. Both acquisitions also dilute what the firm considers SLB’s true competitive advantage. SLB is known for focusing on and dominating the high-impact and technically challenging drilling and evaluation markets. In Wells’ view, both the Subsea One JV and the ChampionX acquisition shift SLB’s exposures to a more production-oriented outlook.