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Forecasting Schlumberger’s Stock Price

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Schlumberger’s implied volatility in context

On July 3, 2017, Schlumberger’ (SLB) implied volatility was ~22%. The company’s 1Q17 earnings were announced on April 21, 2017. Since then, its implied volatility has increased marginally. Implied volatility reflects a stock’s potential movement as viewed by investors.

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Peer comparison

Schlumberger’s implied volatility in the past and now

On January 20, 2016, Schlumberger’s implied volatility was at its highest in three years at ~43%. Schlumberger’s financial results for 2016 were released the following day. Schlumberger’s stock price fell 3% on January 20. Its implied volatility subsided gradually and is currently a bit higher than its past-three-year average of 24%. Earlier, in August 2015, Schlumberger’s implied volatility spiked abruptly following an agreement to acquire Cameron International but came down soon after that.

Since early May 2017, Schlumberger’s implied volatility has risen from ~19% to ~22%, despite crude oil’s volatility decreasing. Schlumberger makes up 6.8% of the Vanguard Energy ETF (VDE). VDE has fallen 12% since March 31, 2017, whereas Schlumberger has fallen 14%.

Stock price forecast for Schlumberger

In view of Schlumberger’ implied volatility and assuming a normal distribution of stock prices, a standard deviation of one, and a probability of 68.2%, Schlumberger’s stock will likely close between $69.02 and $64.92 in the next seven days. Schlumberger’s stock price was $66.97 on July 3, 2017. Next, we’ll discuss short interest in Schlumberger stock.

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