SLB's (SLB) production-focused exposure, growth in Data Center Solutions, and its Digital segment will support earnings durability in 2026, with additional leverage to recovery in 2027 to 2028, Morgan Stanley said Monday.
Management framed Q1 as a disruptive reset rather than a demand issue, with Middle East outages weighing on short-term results but not the underlying upcycle, the brokerage said.
SLB forecasts a gradual recovery in the Middle East, with restoration activity a near-term driver followed by capacity expansion to replenish lost supply, according to the note.
Management expects mid-to-high single digit international growth excluding the Middle East in Q2, with strength across multiple basins countering regional declines, the brokerage added.
For full-year 2026, SLB reiterated its capital investment plan of about $2.5 billion and shareholder returns of more than $4 billion despite short-term volatility, with growth led by international markets, as well as digital and production-oriented businesses, according to the note.
Morgan Stanley maintained an overweight rating on SLB and raised the price target to $57 from $55.
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