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Schulmberger Is Ranked Fifth for ‘Buy’ Ratings

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Jun. 22 2018, Updated 2:40 p.m. ET

Analysts’ ratings for Schlumberger

Schlumberger (SLB) is ranked fifth on the list of the companies with the highest “buy” ratings assigned by sell-side analysts in the OFS (oilfield equipment and services) industry. Approximately 74% of the analysts tracking Schlumberger recommended a “buy” or some equivalent as of June 19. Approximately 23% of the analysts recommended a “hold,” while 3% recommended a “sell” or some equivalent. Analysts’ consensus target price for Schlumberger was ~$79.5 as of June 19. Currently, Schlumberger is trading near $65.7, which implies 21% returns over the next 12 months at the current price.

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Schlumberger’s rating has changed

On March 19–June 19, the percentage of analysts recommending a “buy” or some equivalent for Schlumberger decreased from 76% to 74%. Analysts’ “hold” recommendations increased during the same period. A year ago, ~82% of the sell-side analysts recommended a “buy” for Schlumberger.

Factors that impacted Schlumberger’s performance

  • There were increased sales of drilling and measurement products and services in North America due to high demand for rotary steerable systems required in drilling longer laterals in shale oil production.
  • Seasonality impacted rig-related activities in the Northern Hemisphere and the North Sea and dented Schlumberger’s integrated drilling services projects in the United Kingdom, continental Europe, the Far East, Australia, and Venezuela.
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Opportunities and challenges

In North America onshore, Schlumberger’s management expects drilling activity to continue to grow in volume and complexity. Schlumberger’s management is particularly upbeat on the Middle East and the North Sea in Europe in its international energy business. However, management also expressed concerns about the growth prospects in Africa and Latin America.

Highest “hold” ratings in the OFS industry

All of the sell-side analysts rated CARBO Ceramics (CRR) as a “hold” as of June 19. Approximately 80% of the sell-side analysts rated Oceaneering International (OII) as a “hold,” while 76% rated National Oilwell Varco (NOV) as a “hold.”

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