Why Weatherford International plc Stock Is Defying the Odds and Rallying Today
What happened
Shares of Weatherford International plc (NYSE: WFT) bounced back on Wednesday, rallying more than 11% by 2:30 p.m. EDT. The move is a bit of a head-scratcher since two analysts downgraded the oil-field service company's stock today.
So what
Weatherford International has taken its investors on a wild ride this week. Shares of the troubled oilfield service company plummeted on Monday after it reported weaker-than-expected third-quarter results. That sell-off continued on Tuesday, as investors kept bailing on the company while an analyst from Citi downgraded the stock to sell and slashed the bank's price target from $3.50 to $1 per share. Concerns that weakening oil-market conditions would put even more pressure on the struggling company drove that downgrade.
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Meanwhile, two more analysts downgraded Weatherford's stock on Wednesday. Both Guggenheim and UBS slashed their rating on the stock from buy to neutral, with UBS also lowering its price target from $5 to $1.50 per share. UBS basically threw up its hands and now plans to wait on the sidelines to see if the company can turn things around.
Now what
Generally, when several analysts downgrade a stock, it tends to sell off. However, after Weatherford's stock cratered to begin the week, investors appear to be going bargain hunting today and scooping up shares of this beaten-down oil stock. While that move could pay off if the company can turn around its sinking ship, there's an increased risk that the company might eventually need to declare bankruptcy so that it can sort out its financial situation. That's why investors may be better off avoiding this oil stock and consider investing in one of these top-tier ideas, instead.
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Matthew DiLallo has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
