Weatherford rises most in 3 years as $1 bn asset sales eyed

4/25/2014

Weatherford rises most in 3 years as $1 bn asset sales eyed

DAVID WETHE

ZUG, Switzerland (Bloomberg) -- Weatherford International Ltd. climbed the most in three years after reporting better-than-expected earnings and forecasting as much as $1 bn in divestiture proceeds by year-end amid a planned corporate turnaround.

The services provider rose 11% to $20.40 at 11:55 a.m. in New York. Earlier the shares climbed as much as 12%, the biggest intraday rise since March 29, 2011.

The Geneva-based company reported earnings after the close of regular trading yesterday, excluding certain items, that beat the 11-cent average of 29 analysts’ estimates compiled by Bloomberg. Weatherford has previously named five businesses it’s looking to sell or split off and expects to generate $500 million to $1 bn in asset sales by the end of this year, CEO Bernard Duroc-Danner said today on a conference call.

“It’s the lack of bad news on the earnings front combined with the progress in the restructuring that’s really what’s pushing the stock,” Stephen Gengaro, an analyst at Sterne Agee & Leach in New York, who rates the shares a buy and owns none, said today in a phone interview. “Their track record of meeting expectations has been really poor.”

Prior to last year’s third quarter, Weatherford missed adjusted earnings-per-share estimates in 10 out of the past 11 quarters, according to data compiled by Bloomberg. The first quarter this year marks the third consecutive period of better-than-expected results.

“People have gone from being pessimistic to being cautiously optimistic to having some of the impediments to their optimism removed,” Gengaro said.

Weatherford expects second-quarter earnings per share to be in the range of 21 to 23 cents, higher than the 18-cent average of 28 analysts’ estimates compiled by Bloomberg.

The company, which has 15 buy ratings from analysts, 16 holds and two sells, is the second-best performer this year in the Philadelphia Oil Service Index, climbing 32%. Nabors Industries Ltd. climbed the most at 48%.

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