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What Are Analysts’ Recommendations for BHI, SLB, HAL, and CAM?

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Mar. 15 2016, Updated 11:04 p.m. ET

Analyst recommendations

In this part, we’ll look at Wall Street analysts’ targets for our select OFS (oilfield services and equipment) stocks. Analysts expect all four of the companies to deliver positive returns over the next 12 months.

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Analysts favor Baker Hughes

Approximately 78% of the analysts tracking Baker Hughes (BHI) recommended a “buy” or an equivalent rating. Approximately 19% recommended a “hold.” The rest recommended a “sell.” Analysts’ consensus target price for Baker Hughes is $56.80. Currently, Baker Hughes is trading near $43. This implies a 32.5% return over the next 12 months. Baker Hughes accounts for 1.5% of the ProShares Ultra Oil & Gas ETF (DIG).

Despite weakness in the energy market, Baker Hughes’s product sales were strong in the Middle East and Asia-Pacific. During fiscal 4Q15, the company won projects in Brazil, Angola, and Norway. In fiscal 4Q15, Baker Hughes’s free cash flow was positive. However, North America continues to drag Baker Hughes’s performance. Its pending merger with Halliburton has been pushed back due to more regulatory investigations. Baker Hughes is one of analysts’ top picks in the OFS industry.

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Recommendations for Schlumberger and Halliburton

Approximately 75% of the analysts tracking Schlumberger (SLB) have recommended a “buy” or an equivalent rating. Approximately 20% recommended a “hold.” The rest recommended a “sell.” Analysts’ consensus target price for Schlumberger is $81.83. Currently, Schlumberger is trading at $72. This implies a 14.1% return over the next 12 months.

Approximately 75% of the analysts tracking Halliburton (HAL) have recommended a “buy” or an equivalent rating. Approximately 22% recommended a “hold.” The rest recommended a “sell.” Analysts’ consensus target price for Halliburton is $39.90. Currently, Halliburton is trading near $32. This implies a 23.6% return over the next 12 months.

Why analysts are skeptical about Cameron International

Only ~42% of the analysts tracking Cameron International (CAM) recommended a “buy” or an equivalent rating. Approximately 58% recommended a “hold.” Analysts’ consensus target price for Cameron International is near $69. Currently, Cameron International is trading near $66. This implies a 6% return over the next 12 months. Lower onshore drilling activity in North America, a lower project-related backlog, a reduction in the service activity in Cameron International’s Drilling segment, and lower volumes and pricing pressures in Cameron International’s Valves and Measurement segment are some of the reasons why analysts have low ratings for Cameron International.

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