SLB: Digital Expansion Will Drive Long-Term Upside Despite Macro Headwinds

Analysts have modestly trimmed their blended price target on SLB by about $1 to reflect a slightly higher discount rate and only marginal improvements in long term growth and profitability assumptions, even as they highlight company specific digital and international tailwinds that help offset sector wide macro risks.

Analyst Commentary

Street commentary on SLB reflects a mix of optimism around structural growth drivers and caution on the macro backdrop, resulting in only modest net changes to price targets and largely unchanged ratings.

Bullish Takeaways

• Bullish analysts point to the newly unveiled digital segment as a key incremental growth engine that can support multiple expansion relative to traditional oilfield services peers.
• Recent price target increases emphasize SLB's consistent execution in core businesses, reinforcing confidence in management's ability to deliver on margin and free cash flow targets.
• Positive views highlight the company's exposure to longer cycle and international activity, which is seen as more resilient and supportive of steadier earnings growth.
• Some forecasts call out a favorable risk reward skew as digital and international tailwinds are expected to compound over the next several years, partially offsetting near term sector headwinds.

Bearish Takeaways

• Bearish analysts are trimming price targets to reflect a tougher macro setup, including renewed concerns around oil prices and the potential for further activity cuts in North America.
• There is growing caution around 2026 earnings visibility, with some expecting estimates to face downside risk if capital spending plans remain constrained.
• Neutral to cautious views stress that, despite recent signs of a bottoming in oil and gas activity, any recovery could be slow and weighted toward the back half of 2025 and into 2026, limiting near term re rating potential.
• Within the sector, more defensive, production focused names are sometimes preferred, which can cap relative upside for SLB in the event of another leg down in commodity prices or service pricing.

What's in the News

• The Trump administration drafts a plan to reopen California coastal waters to offshore drilling with six potential lease sales from 2027 to 2030, which could boost long-term demand for offshore services providers including SLB (Washington Post).
• SLB launches Tela, an agentic AI assistant embedded across its software portfolio to automate and transform upstream workflows, aiming to improve productivity and decision making at scale (company announcement).
• The OneSubsea joint venture wins two sizeable EPC contracts from PTTEP to expand deepwater fields offshore Malaysia, supplying subsea production systems for multiple gas and oil projects (company announcement).
• SLB and Ormat enter a strategic alliance to fast track development and commercialization of next-generation enhanced geothermal systems, targeting large-scale geothermal power deployment (company announcement).
• SLB completes a multiyear share repurchase program totaling about 10% of shares outstanding, returning more than $6.3 billion to shareholders since 2016 (company filing).

Valuation Changes

• Fair Value Estimate has edged down slightly to $45.31 from $45.37, reflecting a marginally more conservative outlook.
• Discount Rate has risen slightly to 7.42% from 7.41%, implying a modestly higher required return for equity holders.
• Revenue Growth has increased slightly to 4.85% from 4.84%, signaling a small uplift in long term top line expectations.
• Net Profit Margin has ticked down marginally to 12.72% from 12.72%, indicating essentially unchanged profitability assumptions.
• Future P/E has decreased slightly to 19.68x from 19.70x, suggesting a minimally lower valuation multiple applied to forward earnings.