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Analyzing Wall Street's Forecast for Weatherford International

PART:
1 2 3 4 5
Part 2
Analyzing Wall Street's Forecast for Weatherford International PART 2 OF 5

What to Expect from Weatherford in the Next Week

Weatherford’s implied volatility

On March 17, 2017, Weatherford International’s (WFT) implied volatility was ~57%. Since its 4Q16 financial results were announced on February 1, Weatherford’s implied volatility fell from 73.4% to the current level. Weatherford is 4.6% of the SPDR S&P Oil & Gas Equipment & Services ETF (XES). Read Did Weatherford International Meet 4Q16 Estimates? to learn how Weatherford performed in 4Q16.

Implied volatility for Weatherford’s peers

On March 17, Precision Drilling’s (PDS) implied volatility was ~53%, while McDermott International’s (MDR) implied volatility was ~49%. On March 17, CARBO Ceramics’ (CRR) implied volatility was ~58%.

What to Expect from Weatherford in the Next Week

What to Expect from Weatherford in the Next Week

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What’s the forecast for Weatherford?

Based on Weatherford International’s implied volatility and assuming normal distribution of stock prices and one standard deviation probability of 68.2%, Weatherford stock will likely close between $6.64 and $5.66 in the next week. Weatherford’s stock price was $6.15 on March 17, 2017.

Debt impacts Weatherford’s implied volatility

Recently, Weatherford disclosed its plans to either form a joint venture or sell its US pressure pumping assets. Weatherford can reduce its debt if it monetizes its pressure pumping assets. On November 1, 2016, Weatherford International disclosed that, based on its 4Q16 forecast, it will meet its debt covenants. The discloser followed a sudden rise in volatility in Weatherford’s stock price after some analysts forecast that Weatherford wouldn’t meet its debt covenants. Read Understanding Weatherford International’s Plan with Debt Covenants to learn more.

Next, we’ll discuss what Weatherford’s short interest suggests.

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