Weatherford International's (WFRD) strong free cash flow and return on invested capital metrics should continue to improve, RBC Capital Markets said Wednesday in a report, initiating coverage of the stock with an outperform rating.

Weatherford has emerged as a "leaner, more resilient company with $1 billion in cash, positioned for long-term growth," following a strategic shift that began in 2020 under CEO Girish Saligram, RBC said.

The company's earnings before interest, taxes, depreciation and amortization margins, free cash flow margins, and return on invested capital remain ahead of the peer averages, supported by portfolio optimization in recent years, the report said.

Weatherford is poised to stabilize revenue this year and then grow 8% in 2027, ahead of peers, RBC said.

"With a valuation already discounting meaningful risk associated with the Iran war," Weatherford's shares "tend to significantly outperform peers coming out of shock events," the report said.

RBC has a $105 price target on Weatherford stock.

Price: 83.64, Change: -2.76, Percent Change: -3.19