Analyst Note
| Katherine Olexa |No-moat Weatherford beat its first-quarter guidance as several regional end markets proved much stronger than anticipated, further supported by earlier-than-expected contract additions (initially slated for the second quarter). Total revenue increased 26% year over year and decreased 2% sequentially, slightly less than the low- to mid-single-digit revenue drop typical of first-quarter performances. Profitability also outperformed expectations with the firmwide adjusted EBITDA margin approaching 23%. This reflects a more than 600 basis point increase year over year, nearly double the guidance management issued in February. Accelerating activity in international markets on top of this quarter's outperformance leaves Weatherford well-positioned for a very strong fiscal 2023. We're therefore raising our fair value estimate to $62 from $53 following the results.