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Nabors Industries: Management Expectations for 2018


Mar. 1 2018, Published 12:49 p.m. ET

Nabors Industries’ stock price reaction

Nabors Industries (NBR) released its financial results for 4Q17 and fiscal 2017 on February 27. On that day, NBR’s stock price reacted negatively, falling 3.8% to $6.66 from the previous day’s close and underperforming the 1.4% fall in the crude oil prices over the previous day’s close. The VanEck Vectors Oil Services ETF (OIH) decreased 1.6%.

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NBRs stock price movement versus the industry

Since February 28, 2017, Nabors Industries’ stock has fallen 55% as of February 28, 2018. Since February 28, 2017, NBR has underperformed the VanEck Vectors Oil Services ETF, which has generated -24% returns. The Energy Select Sector SPDR ETF (XLE), the broader energy industry ETF, has gone down ~4% in the past year. Nabors Industries has grossly underperformed the SPDR S&P 500 ETF (SPY), which increased 16% during the period.

What does Nabors Industries’ management expect?

Nabors Industries’ management expects margins to improve in the US onshore business in 1Q18 while margins may take a hit in NBR’s international operations. In the 4Q17 earnings press release, William Restrepo, NBR’s CFO, commented, “We expect our U.S. Lower 48 daily margins to improve by approximately $1,000 in the first quarter, as we add several more rigs to our working fleet. Our International segment will benefit from incremental rigs; however, margins will diminish in the near term as a result of mix and rate adjustments on numerous multi-year contract extensions.”

He continued, “During the second half of 2018, we expect daily margins in this segment should revert to their long-term levels as our rig count increases and we benefit from additional high margin work.”

Next in this series, we’ll discuss Wall Street analysts’ targets for Nabors Industries.


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