NOV: Strategic Hold Amid Transition Toward 2026 Cycle Convergence
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Esxeleryn Analytics191 FollowersFollow5ShareSavePlay(14min)CommentsSummaryNOV Inc. is rated hold, reflecting a transition year in FY2025 before potential cycle convergence and upside in FY2026.Record $4.56B backlog and strong FCF ($245M in Q3) provide valuation support, but operational friction and litigation risks cap near-term upside.Bearish catalysts include aftermarket revenue compression, royalty litigation losses, and rising tariff expenses that may offset cost savings.Technical analysis targets $19.15–$23.38 (43% upside), but a breach below $14.43 invalidates the bullish setup; monitoring aftermarket bookings and litigation outcomes is critical. Sharkyjones/iStock Editorial via Getty Images My ‘Hold’ investment thesis for NOV Inc. (NOV) depends on a transition year in FY2025 that leads to a possible blending of offshore and international upcycles in FY2026. The logic for a Hold ratingThis article was written byEsxeleryn Analytics191 FollowersFollowA trader, researcher, and analyst possessing experience spanning years in the domains of US stocks, transnational equities, global indexes, commodities, FX/interest securities, cryptocurrencies, ETFs, options, futures, and CFDs. My expertise encompasses fundamental analysis, technical analysis, quantitative analysis, portfolio management, investment/capital mapping, and programming.Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.Quick InsightsWhat is the investment thesis and rating for NOV Inc.?I rate NOV Hold, as FY2025 is a transition year with capped near-term upside due to operational and legal risks, but FY2026 offers potential upside from cycle convergence.How do cost savings and tariff expenses impact NOV’s profitability outlook?Projected $100M in annualized cost savings could be neutralized by rising tariff expenses ($25M/quarter), limiting margin expansion and offsetting internal efficiency gains.What are the key forward-looking risks and catalysts for NOV’s valuation?Major risks include permanent loss of high-margin royalties and aftermarket revenue declines; upside depends on backlog conversion, cycle convergence, and reversal in drilling aftermarket bookings.Recommended For You