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Oil States International: Third-Highest ‘Sell’ Recommendations

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Analysts’ recommendations for Oil States International 

Oil States International (OIS) has the third-highest “sell” recommendations from sell-side analysts in the OFS (oilfield equipment and services) industry. Approximately 6% of the Wall Street analysts tracking Oil States International recommended a “sell” or some equivalent as of June 25. Approximately 71% of the analysts recommend a “hold,” while 24% recommended a “buy” or some equivalent. Analysts’ consensus target price for Oil States International was ~$34.1 as of June 25. Currently, Oil States International is trading near $31.8, which implies 7% returns over the next 12 months at the current price.

How the rating has changed

On March 25–June 25, the percentage of analysts recommending a “sell” or some equivalent for Oil States International increased from 0% to 6%. Analysts’ “buy” recommendations decreased during the same period. A year ago, none of the sell-side analysts recommended a “sell” for Oil States International.

Why some analysts are bearish 

Despite crude oil price’s considerable recovery, Oil States International’s Well Site Services continues to be impacted negatively by the energy market depression since 2014. The fall in crude oil price in 2015 and 2016 led many of Oil States International’s upstream energy producers, which undertake exploration and production activities, to defer well completions. In the short term, an increase in the number of drilled but unfinished wells can have a negative impact on Oil States International’s results of operations. The more pronounced concerns for Oil States International lie in its subsea operation. Many offshore projects have been deferred since the 2014 downturn. Due to the heavy capital investment required in these projects, they still haven’t come online, which reduced the demand for Oil States International’s products and services.

Analysts’ ratings for the largest OFS companies

Approximately 3% of the sell-side analysts tracking Schlumberger (SLB), the largest OFS company by market capitalization, assigned a “sell” rating as of June 25. None of the Wall Street analysts assigned a “sell” rating for Halliburton (HAL)—the second-largest OFS company. None of the analysts rated Baker Hughes, a GE Company (BHGE), as a “sell.”

Next, we’ll discuss analysts’ ratings for Tenaris S.A. (TS).

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