ADTRAN, Inc. (NASDAQ: ADTN) Cut to Hold at Needham Research.
Advance Auto Parts (NYSE: AAP) Raised to Outperform at Credit Suisse.
Air Products and Chemical, Inc. (NYSE: APD) Cut to Neutral at JPMorgan.
Arcelor Mittal (NYSE: MT) Cut to Neutral at HSBC.
Automatic Data Processing. Inc. (NYSE: ADP) Started as Outperform at Credit Suisse.
BankUnited, Inc. (NYSE: BKU) Cut to Neutral at BofA/ML.
Boeing Co. (NYSE: BA) Cut to Sell at Societe Generale.
Cardtronics, Inc. (NASDAQ: CATM) Started as Outperform at Credit Suisse.
Cash America International (NYSE: CSH) Raised to Buy at Sterne Agee.
Chevron Corporation (NYSE: CVX) maintained Buy with $130 target but cut estimates at Argus.
Citigroup, Inc. (NYSE: C) Maintained Sell at Argus.
Human Genome Sciences Inc. (NASDAQ: HGSI) Started as Buy with $14 price target at Maxim.
Lamar Advertising Co. (NASDAQ: LAMR) maintained as Outperform and named as the Bull of the Day at Zacks.
MasterCard Inc. (NYSE: MA) Started as Outperform at Credit Suisse.
RadioShack Corporation (NYSE: RSH) Cut to Underperform at Credit Suisse.
Scotts Miracle-Gro (NYSE: SMG) Cut to Underperform at BMO Capital.
UBS AG (NYSE: UBS) Raised to Overweight at Morgan Stanley.
Veolia Environnement (NYSE: VE) Cut to Neutral at HSBC.
Visa, Inc. (NYSE: V) Started as Outperform at Credit Suisse.
Weatherford International Inc. (NYSE: WFT) named as value stock of the day at Zacks.

Read Also: Jim Cramer touts Broadcom Corporation (NASDAQ: BRCM) as a cheap catch-up semiconductor stock. This creates a chart versus fundamental event in price.

If you enjoyed the top analyst calls, you can sign up in the box below to join our morning email list to receive news directly in your inbox each morning. We include major analyst upgrades and downgrades, IPO and M&A news, special situation developments, observations on Warren Buffett and key market gurus, as well as special exclusive feature stories.

JON C. OGG

Brightpoint Inc. (NASDAQ: CELL) Reiterate as Buy with a $14 price target objective at Canaccord Genuity.
Cisco Systems Inc. (NASDAQ: CSCO) Reiterated as Buy with $24 price target objective at Argus.
Deckers Outdoor Corporation (NASDAQ: DECK) Reiterated as Buy with a $122 price target objective at Canaccord Genuity.
Diamond Offshore Drilling Inc. (NYSE: DO) Started as Sell with a $70 target price objective at Goldman Sachs.
France Telecom (NYSE: FTE) Cut to Underperform and named as Bear of the Day by Zacks Investment Research.
Hatteras Financial Corporation (NYSE: HTS) Cut to Neutral at Stern Agee.
Healthways Inc. (NASDAQ: HWAY) Raised to Buy at Stifel Nicolaus.
Hercules Offshore, Inc. (NASDAQ: HERO) Started as Neutral at Goldman Sachs.
Las Vegas Sands Corp. (NYSE: LVS) Cut to Neutral at Janney Capital Markets.
Lululemon Athletica Inc. (NASDAQ: LULU) Reinitiated as Buy at Stern Agee.
Melco Crown Entertainment Ltd. (NASDAQ: MPEL) Raised to Outperform from Neutral at Credit Suisse.
NRG Energy, Inc. (NYSE: NRG) Cut to Neutral from Buy at UBS.
Philip Morris International, Inc. (NYSE: PM) Cut to Neutral from Buy at Nomura.
Schlumberger Limited (NYSE: SLB) Started as Neutral at Goldman Sachs.
Sonic Automotive, Inc. (NYSE: SAH) named as value stock of the day by Zacks Investment Research.
State Auto Financial (NASDAQ: STFC) Raised to Buy from Neutral at Janney Capital Markets.
Veolia Environnement S.A. (NYSE: VE) Cut to Hold from Buy at Deutsche Bank.
VeriSign, Inc. (NASDAQ: VRSN) Raised to Outperform and featured as the Bull of the Day by Zacks Investment Research.
Weatherford International Ltd. (NYSE: WFT) Started as Buy with a $22 price target objective at Goldman Sachs.
Yum! Brands, Inc. (NYSE: YUM) Reiterated Buy with $65 fair value target at Janney Capital Markets.

Your email address

subscribe

terms and conditions

JON C. OGG

In its November report, OPEC cut its estimate of world economic growth in 2012 from 3.7% to 3.6%, though the cartel did leave its oil demand forecast unchanged at 1.2 million barrels/day, up from 900,000 barrels/day of increased demand in 2011. OPEC expects demand for its crude to rise by 1 million barrels/day next year, and non-OPEC demand to rise by 200,000 barrels/day. The services companies need stronger demand growth if they are themselves to grow.

The six companies we’ve looked at for this report are Schlumberger Ltd. (NYSE: SLB), Halliburton Co. (NYSE: HAL), BakerHughes Inc. (NYSE: BHI), Transocean Ltd. (NYSE: RIG), National Oilwell Varco, Inc. (NYSE: NOV), and Weatherford International, Inc. (NYSE: WFT). All have market caps greater than $10 billion, even though share prices have fallen by a minimum of -1% since the end of July.

All data from Yahoo! Finance, and current share prices were gathered just before noon today.

Schlumberger Ltd. (NYSE: SLB) has a median target price of $94.00 from 27 brokers. Shares are trading today at $70.79, for a potential upside of $23.21, or 32.8%. The company pays a dividend yield of 1.3 and has a forward P/E of 14.46. Schlumberger’s target price has dropped from $105 to $94 in just four weeks, and its share price today is barely 1% higher than it was then. The company missed expectations on its last earnings report and the weaker demand and economic forecast going forward continues to put pressure on the stock. The company’s target price is in no imminent danger of being reached. In fact, the target will likely be revised downward again before the company reports fourth quarter earnings. EPS estimates for the fourth quarter have fallen by $0.10 in the past 60 days.

Halliburton Co. (NYSE: HAL) has a median target price of $53.50 from 28 brokers. Shares are trading today at $35.93, for an implied gain of $17.57, or 48.9%. The company pays a dividend yield of 0.9% and its forward P/E is 8.84. Halliburton’s target price has fallen from $63.00 to $53.50 in the past four weeks, even though the company managed to beat third quarter EPS and revenue estimates. The company has put a lot of eggs in the shale gas and oil drilling basket, and that has so far paid off everywhere but in the company’s share price. Fourth quarter EPS estimates have decreased by -$0.04 in the past 60 days and while the implied upside is very attractive, Halliburton certainly won’t get near it.

Baker Hughes Inc. (NYSE: BHI) has a median target price of $76.00 from 25 brokers. Shares are trading today at $54.24, for an implied upside of $21.76, or 40.1%. The company pays a dividend yield of 1% and its forward P/E is 9.82. Like every other stock in this group, Baker Hughes’ target price has dropped in the past month, from $91.00 to its current level of $76.00. The company missed third quarter EPS estimates, but fourth quarter estimates have risen by $0.01 in the past 60 days. The company’s share price today is -4% lower than it was on October 19th, when we last looked at these stocks. Again, the implied gain is not on the table for the current quarter, and likely not for at least part of next year.

Transocean Ltd. (NYSE: RIG) has a median target price of $67.50 from 34 brokers. Shares are trading today at $48.18, for a potential upside of $19.32, or 40.1%. The company pays a dividend yield of 6.4% and its forward P/E is 11.59. Tranocean stock is still weighed down by the company’s exposure to claims related to the Macondo well explosion that killed 11 workers and spilled 5 million barrels of crude into the Gulf of Mexico. Although the company’s target price has dropped from $71.50, its upside potential remains near the same level it was a month ago. Until that spread narrows, the only way Transocean gets nearer its target price is if the target is lowered again.

National Oilwell Varco, Inc. (NYSE: NOV) has a median target price of $88.00 from 24 brokers. Shares are trading today at $67.32, for an implied upside of $20.68, or 30.7%. The company pays a dividend yield of 0.7% and its forward P/E is 11.51. The company raised its quarterly dividend from $0.11 to $0.12 yesterday, boosting its yield slightly. If any of these services companies has a chance to hit its price target, National is the likeliest mainly because its upside potential is the smallest.

Weatherford International, Inc. (NYSE: WFT) has a median price target of $22.50 from 26 brokers. Shares are trading today at $14.95, for an implied gain of $7.55, or 50.5%. The company pays no dividend and its forward P/E is 9.88. Weatherford’s share price today is about -1.3% below its level of a month ago, and its it target price is $1.50 lower. That says about all there is to say about Weatherford’s ability to deliver those implied gains.

Of all these companies, only National Oilwell Varco has much of a chance to deliver on these promises of expected gains. Its price target fell from $95 to $88, putting the target within reach, but not so close that it will be automatic. Even rising crude oil prices aren’t likely to spur a lot more exploration and drilling in the near term, and that’s what National and the rest of this group needs.

Paul Ausick

Schlumberger Ltd. (NYSE: SLB) has a median target price of $105.00 from 26 brokers. Shortly before noon today, shares are trading today at $70.00, for an implied gain of $35.00, or 50%. Schlumberger’s forward P/E is 13.15 and the company pays a dividend yield of 1.5%. The stock’s 52-week trading range is $54.79-$95.64, and at today’s price that’s about 28% above its 52-week low and 27% below the 52-week high. Schlumberger is the largest of the services companies and it has had four straight quarters of revenue growth and three of four quarters of profit growth. The company reports earnings on Friday, and is expected to post EPS of $1.01 on $10.25 billion in revenue. That’s revenue growth of 50% and EPS growth of 30%. The constraint on these numbers going forward is a weakening demand for energy as the global economy continues to struggle. With its upside potential and recent track record, the implied gain for Schlumberger is within reach.

Halliburton Co. (NYSE: HAL) has a median target price of $65.00 from 27 brokers. Shares are trading today at $34.69, for an implied gain of $30.31, or 87%. Halliburton’s forward P/E is 7.85 and the company pays a dividend yield of 1%. The stock’s 52-week trading range is $27.21-$57.77, and at today’s price that’s about 27% above its 52-week low and 40% below the 52-week high. Halliburton reported earnings on Monday, beating EPS estimates of $0.92 by $0.02 and posting record revenue of $6.54 billion. The company is the largest seller of hydraulic fracturing (fracking) services in the US, and with interest in the method growing internationally, the company is well positioned to continue growing both revenues and profits. Halliburton’s shares have fallen slightly since its last report, likely due to overall economic conditions and the scant beat of EPS expectations.

Baker Hughes Inc. (NYSE: BHI) has a median target price of $91.00 from 24 brokers. Shares are trading today at $56.58, for an implied gain of $34.42, or 61%. Halliburton’s forward P/E is 9.75 and the company pays a dividend yield of 1.1%. The stock’s 52-week trading range is $41.91-$81.00, and at today’s price that’s about 35% above its 52-week low and 30% below the 52-week high. Baker Hughes last month increased the amount of borrowing available to it under its revolving credit facility to $2.5 billion. The interest rate on the facility varies from 0.625% to 1.125%, and S&P rates the company’s unsecured debt at ‘A’. In its most recent quarter, Baker Hughes improved EPS by more than double compared with the same period a year ago. Expectations for the third quarter, which ended in September, are for another doubling of EPS.

Transocean Ltd. (NYSE: RIG) has a median target price of $72.50 from 34 brokers. Shares are trading today at $50.99, for an implied gain of $20.51, or 40%.Transocean’s forward P/E is 8.95 and the company pays a dividend yield of 6.3%. The stock’s 52-week trading range is $41.88-$85.98, and at today’s price that’s about 22% above its 52-week low and 41% below the 52-week high. Transocean is most often thought of as an offshore drilling company, but it also provides many services similar to the Halliburtons and Schlumbergers of the world. The big difference is that it does not offer those services onshore. The other big difference is that Transocean has not yet come to an agreement with BP plc (NYSE: BP) over Transocean’s culpability for the Macondo well explosion. Until that is settled, the company remains under a cloud of uncertainty. The company’s share price is down more than -20% in the past year, the most of any company in this group.

National Oilwell Varco Inc. (NYSE: NOV) has a median target price of $95.00 from 23 brokers. Shares are trading today at $66.09, for an implied gain of $28.91, or 44%.National’s forward P/E is 11.59 and the company pays a dividend yield of 0.7%. The stock’s 52-week trading range is $47.41-$86.71, and at today’s price that’s about 39% above its 52-week low and 24% below the 52-week high. National has just completed a $777 million acquisition of a pipe maker in order to be able to offer additional field services to its customers. The company also received a ‘buy’ rating from analyst firm Sterne Agee yesterday and earlier received an outlook rating of ‘positive’ from S&P. At the end of the last quarter, the company’s long-term debt totaled $500 million, and other acquisitions are not out of the question. The recent acquisition of Complete Production Services, Inc. (NYSE: CPX) by Superior Energy Services, Inc. (NYSE: SPN) could be an indicator that smaller services companies are in play.

Weatherford International Inc. (NYSE: WFT) has a median target price of $24.50 from 24 brokers. Shares are trading today at $15.15, for an implied gain of $9.35, or 62%.Weatherford’s forward P/E is 9.43 and the company does not pay a dividend. The stock’s 52-week trading range is $10.85-$26.25, and at today’s price that’s about 40% above its 52-week low and 42% below the 52-week high. Weatherford, like Transocean, has seen its share price fall in the past 52-weeks. Weatherford, like National, may be shopping for acquisitions, but the company’s $6.2 billion in long-term debt and modest free cash flow could be problematic.

Paul Ausick

As a group, these five have performed reasonably well over the past two quarters, but expectations are high as drilling in the US for shale gas has risen dramatically and more exploration is expected in other hot spots around the globe. Following first quarter earnings reports, the implied upsides for these companies ranged from 20%-26%, a far cry from where those levels are today.

What could have happened is that costs are higher than analysts expected or that the anticipated demand for more drilling hasn’t materialized as quickly or that technical and other difficulties have stalled new drilling. Whatever the cause, the slowdown could mean either that analysts were overly optimistic about these stocks or that the companies have seriously underperformed.

Oddly, perhaps, some target prices have risen while share prices have declined between -15% and -25% since mid-April. Maybe optimism does deserve some of the blame.

Schlumberger Ltd. (NYSE: SLB) is the largest of the oilfield services companies by far and it could be looking to get bigger as it company issued $2.5 billion in new debt. The company could be prepping a shopping spree in Brazil in order to meet government requirements for local sourcing in the development of the country’s huge offshore fields. Shares recently traded at $72.35 and its market cap is $102 billion. The stock’s 52-week trading range is $56.61-$95.22. The current value is trading at a price-to-book ratio of about 3.2 to 1. Its forward price earnings multiple is 13.82. The company currently pays a dividend yield of 1.33% to investors. Thomson Reuters has a consensus price target of $112.23, implying roughly 54% upside to the most recent price.

A US Department of Energy panel has recommended that the Environmental Protection Agency institute tighter controls on air emissions, disclosure of the contents of the fracking fluids, and more study on the possible contamination of drinking water from the use of the fluids. The EPA requested and received information from nine oil field services companies on the make-up of their fracking fluids. The nine were Halliburton Co. (NYSE: HAL), Schlumberger Ltd. (NYSE: SLB), Weatherford International Inc. (NYSE: WFT), Complete Production Services, Inc. (NYSE: CPX), Key Energy Services Inc. (NYSE: KEG), Patterson-UTI Energy Inc. (NASDAQ: PTEN), RPC Inc. (NYSE: RES), Superior Well Services (OTC: SWSIP), and BJ Services, since acquired by Baker Hughes Inc. (NYSE: BHI).

The services companies have invoked an amendment to the 2005 Energy Act, usually called the ‘Halliburton Amendment’, which allows the companies to treat the make-up of their fracking fluids as company-confidential. All of the fluids are primarily water and sand with generally small amounts of chemicals intended to increase the amount of natural gas and oil that can be squeezed out of the shale rocks. One of the chemicals in use is ordinary diesel fuel, which contains benzene, a known carcinogen.

The industry argument is that fracking fluids contain essentially trace amounts of these chemicals and that these amounts are harmless. That may be true, but fracking a well uses millions of gallons of fluids so that even trace amounts eventually add up.

Natural gas producers like Chesapeake Energy Corp. (NYSE: CHK) and Range Resources Corp. (NYSE: RRC) have called on the services companies to reveal the composition of their fracking fluids because these companies also stand to lose big if federal and state governments impose really strict controls on drilling. The CEO of Range Resources has referred to the secrecy surrounding the composition of fracking fluids as “a little silly.”

He’s right of course. It’s a little hard to believe that tiny differences in the composition of these fracking fluids make any significant difference at all to the amount of gas that actually flows from a well. The whole thing looks like a case of secrecy for its own sake in an attempt by the services companies to boost their own profits either by using dangerous chemicals or by selling snake oil.

Pressure from producers like Chesapeake and Range Resources is far more likely to have an impact on the services companies than is the threat of federal regulation. The producers have even more to lose than the services companies because if they can’t pump gas out of the ground, they lose both the revenue and the lease rights.

The question the services guys and the producers should be asking themselves is how much less gas would we extract if we used non-toxic chemicals in our fluids. The answer is probably ‘Not much.’

If that’s the case, the natural gas industry and the services companies could have avoided a lot of the negative news about hydraulic fracturing. But for some reason, they’d always rather fight than adapt.

Paul Ausick

The company beat EPS expectations of $0.15, posting earnings of $0.17, excluding items. Revenue came in at a record $3.05 billion. Strong demand in the US and overseas gets the credit. Weatherford’s share price has trailed its rivals mainly because Schlumberger, Halliburton, and Baker Hughes all made big acquisitions last year that have begun to pay off for them in revenues and profits.

Weatherford is also a portfolio company in several major oil field services ETFs, including Oil Services HLDRS (NYSE: OIH), SPDR S&P Oil & Gas Equipment & Services (NYSE: XES), PowerShares Dynamic Oil & Gas Services (NYSE: PXJ), and iShares Dow Jones US Oil Equipment Index (NYSE: IEZ).

The Oil Services HLDRS (NYSE: OIH) holds more than 45% of assets in Schlumberger, Halliburton, and Baker Hughes. Weatherford accounts for about 4.7% of total assets of $2.9 billion. OIH has posted a daily high today of $163.63, before pulling back to below $162. The 52-week trading range is $96.10-$167.37.

The SPDR S&P Oil & Gas Equipment & Services (NYSE: XES) is an equally-weighted fund that holds about 2% of its total assets of about $519 million in Weatherford shares. Shares came within pennies of posting a new 52-week high this morning, but are now trading at $43.97, slightly down from yesterday’s close at $44.03. The 52-week range is $25.38-$44.63. The fund gets a 3-star rating from Morningstar.

The PowerShares Dynamic Oil & Gas Services (NYSE: PXJ) holds about 4.7% of its $254 million of total assets in Weatherford shares. Shares rose as high as $26.55 this morning before pulling back to $23.65. The 52-week range is $14.73-$26.84. The fund gets a 2-star rating from Morningstar.

The iShares Dow Jones US Oil Equipment Index (NYSE: IEZ) holds about 4.2% of its $707 million in total assets in Weatherford shares. The fund posted a new 52-week intra-day high this morning before pulling back to stand currently at $68.67. The new 52-week range is $37.77-$69.39. The fund gets a 3-star rating from Morningstar.

Because Weatherford does not play a large role in any of these funds its impact is limited. As a whole, though, the oil field services sector is currently flourishing. Demand for rigs and equipment to drill for shale gas in the US is primarily responsible.

In the future, keep an eye on announcements from Petrobras for new contracts as well as contracts of northern and western Africa and in Iraq. The sector is could be ready for a nice upturn, with the ETFs hanging on for the ride.

Paul Ausick

Many events are ongoing and some are carryover events to consider, and we have added color on each if applicable.  On a separate note, we did compile what is a detailed preview of the top earnings this coming week as well as the top ten analyst calls of this last week.

Advanced Micro Devices, Inc. (NYSE: AMD) was one of the top gainers on Friday after it reported positive earnings.  The 19%+ gain to $7.75 puts it back in the middle of its 52-week trading range of $5.53 to $9.58. The 85+ million shares traded appears to be the biggest one-day share volume back to November of 2009.  Forbes is calling for a run to $10 even with its CEO overhang issues.

BankUnited, Inc. (NYSE: BKU) has been public for just about six-months and its IPO lock-up period from insiders and 10% owners is set to end this week. At $25.61, its post-IPO range is $24.88 to $29.90.

Books-A-Million Inc. (NASDAQ: BAMM) may have thin trading volume and may only be worth $53 million in market capitalization, but we believe that this small cap offers a stealthy road to winning from the Borders bankruptcy liquidation.  We featured this as the stealth winner, and for some reason the shares were up 10% on Friday ahead of a Bizjournals.com report that the company submitted bids for 30 of the Borders locations.

Bridgepoint Education, Inc. (NYSE: BPI) took it on the chin after the close on Friday with a drop of about 6%. The company filed with the SEC to register the resale of 34,589,220 shares of common stock held by Warburg Pincus Private Equity VIII, L.P.  The company has about $1.6 billion in market cap, but at the $30.50 price that comes to a combined share sale of $1.037 billion before the effects of the sell-off.  Can you say dilution to the free float?

CA Inc. (NASDAQ: CA) is slated to have an investor meeting this coming Friday.  With shares trading around $22.60, let’s just go even deeper on record noting that this one has been dead money for about 7 years or so whether it has a $11.5 billion market cap or not.

Clean Harbors, Inc. (NYSE: CLH) is set to trade ex-split on July 27 to reflect its 2-for-1 split.  The stock trades north of $112 and shares hit a high of $114.09 on this last Thursday.  This stock is up about 50-fold in the last ten years and it looks like it is the first split for the $3 billion environmental remediation outfit.

DreamWorks Animation SKG Inc. (NASDAQ: DWA) is in discussions over a streaming movie video rights deal with Netflix.  The move could open up its distribution even more and at $21.05 it is at the bottom of a 52-week range of $19.76 to $37.74.

Also reporting today was Weatherford International, Inc. (NYSE: WFT), which posted adjusted EPS of $0.10 ($0.08 EPS on GAAP basis) on revenue of $2.86 billion. The company was expected to post EPS of $0.18 on revenue of $2.82 billion. Halliburton Co. (NYSE: HAL) reported strong earnings on Monday, but we noted in our coverage that recent sentiment on the oil field services sector has been negative. [http://247wallst.com/2011/04/18/halliburton-earnings-surge-but-services-sector-has-risks-ahead-hal-slb-bhi-wft-oih/] Baker Hughes Inc. (NYSE: BHI) reports earnings next week and is expected to post EPS of $0.78 on revenue of $4.29 billion.

The best thing that can be said about Schlumberger’s first quarter is that at least the company did not get sued by BP plc (NYSE: BP). The British oil giant has filed suit against Halliburton for at least $40 billion for “misconduct” that contributed to the explosion of the Deepwater Horizon and the deaths of 11 workers. BP has already filed lawsuits against Transocean Ltd. (NYSE: RIG), owner and operator of the Deepwater Horizon, and Cameron International Corp. (NYSE: CAM), maker of the failed blowout preventer on the Macondo well.

BP did not specify an amount in its suit against Halliburton, other than to say it would seek damages up to the total cost of the spill from Halliburton. BP’s suit against Transocean seeks $40 billion and the suit against Cameron wants an amount equal to whatever damages are levied against BP by the US government.

The suits have all been filed to beat a court-imposed deadline of yesterday to preserve the right to file suits related to the Macondo disaster.

Shares of Schlumberger are indicated up about 2% before the market opens this morning, while shares of Weatherford are pointing down by more than -3.5%. Transocean shares are also indicated down by about -2.8%. There is no action yet on Halliburton or the others.

Paul Ausick

Halliburton is the first of the services firms to report, with Schlumberger Ltd. (NYSE: SLB) and Weatherford International, Inc. (NYSE: WFT) due on April 21st, and Baker Hughes Inc. (NYSE: BHI) due on April 27th. The EPS estimates for all these firms have been revised downward more often than they have been revised upward in the last 30 days, and estimates for the second quarter are also being pushed lower.

Schlumberger is now expected to post EPS of $0.77, up 24% from the same period a year ago, on revenue of $8.84 billion. A month ago Schlumberger was expected to post EPS of $0.83, and in that time period EPS was revised downward eight times compared with one upward revision. For the second quarter, EPS has been revised from $0.92 to $0.90 in the past month.

Baker Hughes is expected to post EPS of $0.78, a jump of 81% over the first quarter of 2010. Revenue is expected to total $4.28 billion. A month ago, Baker Hughes was expected to post EPS of $0.79. During the 30 days, EPS was revised downward four times and upward just once. For the second quarter, EPS has been revised from $0.85 to $0.86 in the past 30 days.

Weatherford is expected to post EPS of $0.18, a whopping 300% jump over the $0.06 EPS it posted a year ago. Revenue is expected to total $2.84 billion. A month ago, Weatherford’s EPS estimate was pegged at $0.19, and during that period it has been revised downward four times and upward only once. For the second quarter, EPS has been revised from $0.24 to $0.21 in the past month.

The cautious forecasts on earnings are related to a number of factors. First, the weather gets some blame for the decline for the first quarter. Cold and snow in the US have slowed down some projects, and heavy rains in Australia have delayed drilling there as well.  Thomson Reuters has a detailed internal research audio-video highlighting more of the risks for the oil services sector.

Second, political unrest in Libya and elsewhere in the Middle East and North Africa is slowing work there. Third, the delay in restarting drilling in the US Gulf of Mexico is having an impact as well.

Fourth, the rising price of crude, and ultimately gasoline, is causing consumers to drive less. We saw this effect back in 2008 when gasoline prices rose to levels equal to what consumers are paying now. For the services companies this means that new drilling could taper off as demand falls and E&P companies cut back on new drilling.

Working in the drillers’ favor, of course, is the boom in shale gas drilling onshore in the US. That is not likely to slow down much, mainly because leaseholders have to drill in order to maintain their leases.

Based on today’s opening price and the stocks’ median price target, Halliburton’s upside is indicated at about 21%, Schlumberger’s upside is indicated at about 24%, Baker Hughes’ at about 20%, and Weatherford at about 26%. Given the number of issues weighing on estimates, it wouldn’t be surprising if these targets are adjusted downward as well.

Halliburton shares are down about -1.5% in very early trading, to $45.93, within a 52-week range of $21.10-$50.74. The Oil Services HOLDRS ETF (NYSE: OIH) is also down nearly -2.5%, to $152.67, in a 52-week range of $89.48-$167.37.

Paul Ausick