What does Superior Energy Services’ management think?
Superior Energy Services’ (SPN) management thinks the energy industry is moving toward a recovery, although the timing of the recovery remains uncertain. In the fiscal 1Q16 conference call, Superior Energy Services’ CEO, David D. Dunlap, commented, “Speaking of recovery, the equity market is clearly beginning to anticipate a recovery. The timing and pace of a recovery in our markets are uncertain. What is certain is that we have positioned Superior Energy to optimize earnings as the recovery unfolds. We’ve decreased G&A, reduced managerial levels, lowered wages and have fewer facilities in operation.”
What are SPN’ strategies when a recovery begins?
SPN’s management maintains ~40% of its total capacity idle in preparation for a market upturn. When the market recovers, SPN expects to activate idle equipment and anticipates increasing its current equipment base.
Analysts’ targets for Superior Energy Services
While the lowest analyst target price for Superior Energy Services is $13, the highest is $28. The median target price surveyed among sell-side analysts for SPN is ~$19.7. Superior Energy Services is currently trading near $19, implying 3% upside at its median price. Halliburton (HAL), Superior Energy Services’ larger-market-cap peer, is trading at a ~5.5% premium to the median target price set by analysts.
SPN is 0.2% of the iShares Core S&P Mid-Cap ETF (IJH). The energy sector makes up 3.7% of IJH. Read about Wall Street analysts’ best and worst oilfield service stocks in Market Realist’s Wall Street’s Picks: Best and Worst Oilfield Services for 2Q16.
Next, we’ll discuss Superior Energy Services’ revenue and earnings.