Core Labs Earnings: Strong Operating Leverage From Constructive Demand Should Drive Margin Expansion

Following Core Laboratories’ first-quarter results, we see no reason to alter our $22 fair value estimate. First-quarter revenue of $133 million roughly exceeded our expectations by 5%, though operating income trailed our estimate by a decent margin. Nonetheless, we're positive on Core's sequential top-line results. Core typically experiences a seasonal dip in sales during the first quarter. Yet, Core overcame this dynamic despite a mostly flattish sequential result in reservoir description. This was due to disruptions to crude oil transportation from conflicts in both the Middle East and Russia-Ukraine.