Energy
Deutsche Bank Raises Price Targets on Top Oil Services Stocks to Buy
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Any time a commodity-based sector sees a huge fall in the price of the commodities that are the core of its sector, one thing is sure to happen. The lower level players are taken offline and the bigger players go into survival mode. That’s exactly what has happened in the oil industry, and finally the huge drop in the rig count is having an effect. In fact, the International Energy Agency is predicting 2016 will see the biggest fall in non-OPEC production in the past 25 years (almost 700,000 barrels per day), helping rebalance a market that has been dogged by oversupply.
In a new research report, Deutsche Bank notes that the exploration and production companies spent very little in capital expenditures in the first quarter. The reality is there is very little room for management teams to continue cuts after over a year of slashing them. The Deutsche Bank team thinks that ultimately customers will begin to spend some money after coming off of such an abnormally low start to the year, and they think much of that will be production related spending.
Subsequently, the firm is raising targets on some of its top stock to buy. Four companies are lifted, and they may be solid purchases now for aggressive growth accounts.
Forum Energy Technologies
This is a lesser known company that has solid upside potential. Forum Energy Technologies Inc. (NYSE: FET) is a global oilfield products company, serving the subsea, drilling, completion, production and infrastructure sectors of the oil and natural gas industry. Its products include highly engineered capital equipment, as well as products that are consumed in the drilling, well construction, production and transportation of oil and natural gas.
Other analysts on Wall Street also have been positive on the stock, and their thesis is similar to the analysts at Deutsche Bank. Spending and oil price have bottomed, and Forum is one of the companies that will benefit from an uptick in spending going forward.
The Deutsche Bank price target was raised to $17 from $12. The Thomson/First Call consensus target is $13.79. The shares closed Thursday at $14.69.
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