Schlumberger Poised at Neutral - Analyst Blog
21 Mai 2013 - 10:30PM
Zacks
We have reaffirmed our Neutral
recommendation on Schlumberger Limited (SLB), a
leading oilfield services company, on May 7, 2013. Robust
performance in the international arena drove margin improvement.
However, activity weakness in North America hurt earnings. The
company holds a Zacks Rank #3, which is equivalent to a short-term
Hold rating.
Why
Maintained?
Schlumberger's combination of a
strong balance sheet, technological leadership and efficient
management will be beneficial in the long term. We believe that the
company is favorably positioned to benefit from the current trends
in oilfield services, given its improving activity levels and
greater need for stimulation and completion of services in North
America.
In the international arena, the
company experienced a strong quarter and we expect activity levels
to enjoy healthy growth throughout 2013. Schlumberger expects its
international spending on exploration and production to climb 10%
this year. The company is aiming for continued margin improvement
primarily in the Middle East/Asia and Europe/CIS/ Africa regions.
Russia and Australia, in particular, are expected to be sources of
strength in the coming quarters.
Moreover, production management
activity in Ecuador, strength in the Mexico & Central America
and growth in the Argentina, Bolivia & Chile GeoMarkets boosted
profits in Latin America. North American profits were driven
by solid activity in Canada and strong results from the U.S. Gulf
of Mexico.
However, activity weakness in North
America, where Schlumberger has a vast exposure, is likely to
depress its share prices, going forward. Importantly, the continued
weakness in pricing during the quarter and hydraulic
fracturing-related work still face difficulty from overcapacity and
will likely continue to decline this year.
Other Stocks to
Consider
While we prefer to remain on the
sidelines forPioneer, there are other stocks in the sector that
appear more rewarding for the next few months. These include
theZacks Rank #1 (Strong Buy) stocks of Dawson Geophysical
Company
(DWSN), InterOil
Corporation (IOC)
andExterran Holdings, Inc. (EXH).
DAWSON GEOPHYS (DWSN): Free Stock Analysis Report
EXTERRAN HLDGS (EXH): Free Stock Analysis Report
INTEROIL CORP (IOC): Free Stock Analysis Report
SCHLUMBERGER LT (SLB): Free Stock Analysis Report
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