Weatherford International (WFT) has been busy this week, between a $500 million debt raise and an equity offering that is expected to bring in $456 million, the Swiss oilfield services provider is hoping these actions can calm investors' concerns that it could breach its debt covenants in the fourth quarter.
However, shareholders don't appear to be appreciating the recent actions. WFT shares were down more than 4% during midday trading Friday, and have declined by approximately 4% since Nov. 15 when the company said it would launch $500 million senior unsecured debt raise.
Even as investors optimism appears to wane as the week goes on, analysts are mixed on the turnaround story Weatherford is working toward.
"We continue to warn investors regarding the structural balance sheet issues and lack of cash flows and the deals highlight contradictions in management press releases and commentary about positive cash flow and its confidence it will not violate covenants," Stephens' analyst Matthew Marietta wrote in a research note Thursday.
Stephens' Marietta also points out that the equity offerings to reduce liquidity risks may create only short-term optimism "like it did earlier in 2016 after the guidance it has since whiffed and prior financings."
The Stephens analyst notes that while the equity offering "adds a layer of up to 18% dilution to current equity holders," which he adds is slightly positive, but "merely kicking the can." Marietta lowered the earnings per share estimates for the fourth quarter of 2016, as well as fiscal year 2017 and 2018. Stephens rates WFT shares at Underweight with a $3 price target.