Melius reiterates SLB stock Buy rating citing international strength

The market is rewarding SLB not just for cyclicality, but because it is the cleanest lever to a non-US capex re-acceleration at a time when geopolitics is forcing customers to diversify away from concentrated Middle East supply. That matters because international and offshore work tends to be stickier and higher margin than North American activity, so any incremental spending shift should show up disproportionately in mix and cash conversion rather than just topline. The second-order winner is likely the broader offshore supply chain: subsea, riser, and deepwater equipment vendors should see earlier order visibility if final investment decisions are being pulled forward into Africa and other non-Middle East basins.

The near-term risk is that the stock is increasingly pricing a multi-quarter narrative before the earnings base fully catches up. Conflict-driven disruption can inflate pipeline expectations, but it also creates timing slippage, so the next 1-2 quarters may look less linear than the stock suggests. If Middle East activity normalizes faster than expected, or if customers defer sanctioning after a temporary pull-forward, the market could de-rate the “2027 exit rate” story quickly.

The best contrarian angle is that the move may be underestimating how much of SLB’s upside is already in the quality premium. A business with perceived durability, dividend history, and digital exposure often gets bid ahead of actual revisions, which reduces forward multiple expansion from here unless estimates inflect materially. In other words, the fundamental setup is constructive, but the easy money may now belong to higher-beta laggards in offshore services rather than SLB itself.