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Top Analyst Upgrades & Downgrades

Administrator — Wed, 16 May 2012 12:26:14 +0000

These are some of the top analyst upgrades, downgrades and initiations seen in Wall Street research calls this Wednesday.

Aetna Inc. (NYSE: AET) Cut to Hold at Argus.

Akamai Technologies, Inc. (NASDAQ: AKAM) Raised to Neutral at Citigroup.

Baker Hughes Inc. (NYSE: BHI) Cut to Neutral at JPMorgan.

China Life Insurance (NYSE: LFC) named Bear of the Day at Zacks.

Cisco Systems, Inc. (NASDAQ: CSCO) Raised to Overweight at Barclays.

Dunkin’ Brands Group Inc. (NASDAQ: DNKN) Raised to Buy with $38 target at Argus.

Genworth Financial Inc. (NYSE: GNW) maintained Neutral but cut target to $6 from $8 at Credit Suisse.

Hatteras Financial Corporation (NYSE: HTS) Started as Neutral at Credit Suisse.

Lam Research Corporation (NASDAQ: LRCX) Cut to Underweight at JPMorgan.

Novellus Systems, Inc. (NASDAQ: NVLS) Cut to Underweight at JPMorgan.

Patriot Coal Corporation (NYSE: PCX) Cut to Market Perform at FBR.

ReneSola Ltd. (NYSE: SOL) maintained Neutral and cut target to $2.00 at Credit Suisse.

SandRidge Energy, Inc. (NYSE: SD) Raised to Hold at Canaccord Genuity.

Solazyme, Inc. (NASDAQ: SZYM) Started as Outperform at Credit Suisse.

Texas Capital Bancshares (NASDAQ: TCBI) named Bull of the Day at Zacks.

Textainer Group Holdings Limited (NYSE: TGH) named Value stock of the day at Zacks.

Weatherford International Ltd. (NYSE: WFT) Raised to Overweight at JPMorgan.

If you enjoyed the top analyst upgrades and downgrades, you can join our free email newsletter that includes analyst summaries each morning sent right to your inbox. We also cover top issues such as IPOs, special financial exclusives, mergers and more. Sign up in the box below.

JON C. OGG

Filed under: Analyst Calls Tagged: AET, AKAM, BHI, CSCO, DNKN, GNW, HTS, LFC, LRCX, NVLS, PCX, SD, SOL, SZYM, TCBI, TGH, WFT

Baker Hughes, Weatherford Continue Winning Streak for Oilfield Services Companies (BHI, WFT, HAL, SLB, NOV, CHK, OIH)

Paul Ausick — Tue, 24 Apr 2012 16:58:01 +0000

The oilfield services companies are on a roll. Well, sort of. Expectations had been lowered so much coming into this earnings season that every one is able to clear the lowered bar. Baker Hughes Inc. (NYSE: BHI) and Weatherford International Inc. (NYSE: WFT) took their turns today. Last week Halliburton Co. (NYSE: HAL) and Schlumberger Ltd. (NYSE: SLB) made it look easy. National Oilwell Varco Inc. (NYSE: NOV) is scheduled to report before the market opens tomorrow.

The lowered expectations were the result of production slowdowns by natural gas producers like Chesapeake Energy Corp. (NYSE: CHK) that have been bedeviled by low natural gas prices. The slowdown has pushed down rig rates as the services companies seek to keep busy.

Baker Hughes may have been the bigger surprise today. The company had been tamping down EPS expectations for the whole quarter. The initial estimate for first quarter EPS came in at $1.25, gradually sinking to $0.80. Baker Hughes reported EPS of $0.86 today on revenues of $5.36 billion, which also topped the consensus estimate of $5.22 billion.

Weatherford actually missed estimates today, but the company’s upbeat outlook made up for the misses. The company posted adjusted EPS of $0.25 versus an estimate of $0.28. Revenue totaled $3.6 billion versus an estimate of $3.64 billion. Weatherford’s EPS was more than twice what it reported in the same period a year ago and revenues were up 26%.

Weatherford forecast second quarter earnings of $0.24-$0.26, a penny below the consensus estimate of $0.27 and the company expects “modest” revenue and operating income growth for the full year compared with 2011. The company believes it is well-positioned to take advantage of increased activity in Canada and some US oil basins.

Baker Hughes plans to cut capital expenditures by $400 million for the year and the company said it will solve its supply chain issues this quarter. The company did not offer further guidance for the second quarter, but the consensus estimate calls for EPS of $0.77 on revenues of $5.24 billion.

Halliburton and Schlumberger both topped lowered estimates last week, and National Oilwell Varco is slated to post EPS of $1.39 on revenues of $4.29 billion tomorrow. The company’s EPS estimate is actually higher than the initial estimate of $1.36 and the revenue estimate is more than 25% higher than actual revenue in the same period a year ago.

Baker Hughes’ shares are up 6.7% at $43.85 in a 52-week range of $39.40-$81.00.

Weatherford’s shares are up 3.9% at $14.23 in a 52-week range of $10.85-$22.76.

National Oilwell Varco shares are up 1.9% at $78.74 in a 52-week range of $47.97-$87.72.

Halliburton’s shares are up 2.4% at $33.73 in a 52-week range of $27.21-$57.77, and Schlumberger’s shares are up 2.8% at $73.15 in a 52-week range of $54.79-$95.53.

The Market Vectors Oil Services ETF (AMEX: OIH) is up 2% at $40.22 in a 52-week range of $35.80-$45.14.

Paul Ausick

Filed under: Earnings, Oil & Gas Tagged: BHI, CHK, HAL, NOV, OIH, SLB, WFT

Oil Field Services Companies Hit by Weaker Oil Prices (SLB, HAL, BHI, WFT, NOV, RIG)

Paul Ausick — Tue, 06 Mar 2012 18:43:35 +0000

Today’s falling crude prices are having an impact on stocks in the oil field services companies today. Schlumberger Ltd. (NYSE: SLB), Halliburton Co. (NYSE: HAL), Baker Hughes Inc. (NYSE: BHI), Weatherford International Ltd. (NYSE: WFT), National Oilwell Varco Inc. (NYSE: NOV), and Transocean Ltd. (NYSE: RIG) are all down, with Weatherford faring the worst, off -5%.

The selling pressure is a result of the lower forecasts for global economic growth this year, which has had a dampening effect on crude oil prices today. Brent crude is down -1.21% at $122.30/barrel and WTI crude is down -1.66% at $104.95/barrel. Neither price drop is likely to have a significant impact on crude oil production unless today’s economic outlook actually comes true. Even then, the economic hit would have to be more substantial than the -0.3% offered up today for the shrinkage in the eurozone.

China, for example, would have to stick by its forecast of 7.5% GDP growth, and the Chinese are notorious for fiddling with things like bank reserve and lending requirements as the country tries to hit its economic targets. That fiddling very often has unintended consequences that add to market volatility.

The most important factor in crude prices is supply. Not Iran, not speculation, not even global GDP. The central issue for this year is whether or not supply can meet demand. As it stands right now it can, but just barely. A little slowdown won’t hurt producers, and it may even help consumers.

The services companies are all trading well below their target prices and any of the big three — Schlumberger, Halliburton, or Baker Hughes — are reasonable risks given the tight supply/demand situation expected this year.

Paul Ausick

Filed under: 24/7 Wall St. Wire Tagged: BHI, HAL, NOV, RIG, SLB, WFT

24/7 Wall St. Closing Bell (ORCL, ITRI, CSX, ABB, GILD, BKS, BYD, CCO, CIE, DTG, HL, JAKK, M, MDT, PXD, SKS, WLK, THLD, CORT, GTXI, CHTP, WMT, WFT)

Paul Ausick — Tue, 21 Feb 2012 21:05:23 +0000

US markets opened higher this morning and traded higher for most of the day. The DJIA briefly rose above 13,000 for the first time in nearly 3 years. But in the early afternoon, apparently as a result of a failure to break through the 13,000 barrier, stocks turned south and all three indexes fell below their openings. The announced settlement in Greece boosted the market early, and climbing crude oil prices helped energy stocks all day. Commodity prices also rose today as the dollar lost strength. Crude oil was up sharply, with WTI crude up more than 2% at $105.50/barrel and Brent up 0.81% at $121.02/barrel. Gold settled at $1,758.50, up 1.9%, and a two-week high.

The unofficial closing bells put the DJIA up about 16 points to 12,965.99 (0.12%), the NASDAQ fell more than 3 points (-0.11%) to 2,948.57, and the S&P 500 rose 0.07% or nearly 1 point to 1,362.23.

There were several analyst upgrades and downgrades today, including Oracle Corp. (NASDAQ: ORCL) cut to ‘market perform’ at JMP Securities; Itron Inc. (NASDAQ: ITRI) cut to ‘neutral’ at Credit Suisse; CSX Corp. (NYSE: CSX) cut to ‘neutral’ at JPMorgan; ABB Ltd. (NYSE: ABB) cut to ‘equal weight’ at Morgan Stanley; and Gilead Sciences Inc. (NYSE: GILD) cut to ‘equal weight’ at Barclays.

Earnings reports since markets closed last Friday have led to some price changes as of the last half hour of trading today: Barnes & Noble Inc. (NYSE: BKS) is down -4.65% at $12.50 (more coverage here); Boyd Gaming Corp. (NYSE: BYD) is down -10.6% at $8.57; Clear Channel Outdoor Holdings Inc. (NYSE: CCO) is down -3.65% at $12.16; Cobalt International Energy Inc. (NYSE: CIE) is down -6.9% at $31.67; Dollar Thrifty Auto Group Inc. (NYSE: DTG) is up 2.3% at $75.08; Hecla Mining Co. (NYSE: HL) is up 9.6% at $5.50; JAKKS Pacific Inc. (NASDAQ: JAKK) is up 0.7% at $15.16; Macy’s Inc. (NYSE: M) is up 0.8% at $36.53 after posting a new 52-week high earlier today of $38.21; Medtronic Inc. (NYSE: MDT) is down -2.6% at $38.92; Pioneer Drilling Co. (NYSE: PXD) is down -0.2% at $113.45; Saks Inc. (NYSE: SKS) is up 3.4% at $11.24; Wal-Mart Stores Inc. (NYSE: WMT) is down -4.1% at $59.90; and Westlake Chemical Corp. (NYSE: WLK) is down -4.2% at $57.93.

We have a preview of tomorrow’s earnings reports here.

Other standouts from today include the following stocks:

Threshold Pharmaceuticals Inc. (NASDAQ: THLD) is up more than 43% at $5.06 after posting a new 52-week high of $6.65 earlier today. The pharmaceutical maker announced positive results for its pancreatic cancer treatment.

Corcept Therapeutics Inc. (NASDAQ: CORT) is up 49% at $4.52. The drug maker has received FDA approval for its Cushing Syndrome treatment.

GTx Inc. (NASDAQ: GTXI) is down more than -36% at $3.70. The drug maker reported that the FDA issued a clinical hold on further trials of its prostate cancer treatment.

Chelsea Therapeutics International Ltd. (NASDAQ: CHTP) is down nearly -18% at $2.75 after posting a new 52-weekl low of $2.18 earlier today. The development stage drug maker meets with an FDA panel on Thursday to review clinical data on a new drug application. More coverage here.

Weatherford International Ltd. (NYSE: WFT) is down nearly -14% at $15.34. The oil field services company will restate prior earnings due to what the company calls “material weakness in internal controls over financial reporting for income taxes relating to current taxes payable, certain deferred tax assets and liabilities, reserves for uncertain tax positions, and current and deferred income tax expense.” Weatherford expects to take a charge for $225-$250 million for the years before 2010. More coverage here.

Stay tuned for Wednesday. We have noted the following events on the schedule (all times Eastern):

7:00 a.m. – Mortgage Bankers Association purchase applications
10:00 a.m. – Existing home sales
11:30 a.m. – 4-week bill auction
1:00 p.m. – 5-year note auction

Paul Ausick

Filed under: 24/7 Wall St. Wire Tagged: ABB, BKS, BYD, CCO, CHTP, CIE, CORT, CSX, DTG, GILD, GTXI, HL, ITRI, JAKK, M, MDT, ORCL, PXD, SKS, THLD, WFT, WLK, WMT

Mid-day Movers (THLD, CORT, GURE, GTXI, WFT)

Paul Ausick — Tue, 21 Feb 2012 16:50:11 +0000

Just before noon ET today, all three major US stock indexes remain in positive territory, with the DJIA up nearly 45 points at about 12,995, the Nasdaq up 10 points at 2,962, and the S&P 500 up more than 5 points to 1,367. After opening higher this morning, markets slipped briefly before regaining the upward trend. The Greek bailout deal drove morning trading, while rising energy stocks have kept propelling the market higher. The dollar is weaker today, with the dollar index down -0.27% at 78.925. The weaker greenback is giving commodities other than oil a lift as well. The DJIA briefly touched the 13,000 level this morning.

Among the major movers at around noon today are Threshold Pharmaceuticals Inc. (NASDAQ: THLD), Corcept Therapeutics Inc. (NASDAQ: CORT), Gulf Resources Inc. (NASDAQ: GURE), GTXi Inc. (NASDAQ: GTXI), and Weatherford International Ltd. (NYSE: WFT).

Threshold is nearly 70% at $6.00 after posting a new 52-week high of $6.65 earlier this morning. Volume is more than 13x the daily average of about 1 million shares traded. The pharmaceutical maker announced positive results for its pancreatic cancer treatment.

Corcept is up nearly 49% at $4.50. Volume is nearly 24x the daily average of 330,000 shares traded. The drug maker has received FDA approval for its Cushing Syndrome treatment.

Gulf Resources is up more than 19% at $3.13. Volume is nearly 4x the daily average of around 250,000 shares traded. The Chinese mining company has been notified of a possible buyout by its Chairman.

GTX is down more than -34% at $3.80. Volume is more than 5x the daily average of around 423,000 shares traded. The drug maker reported that the FDA issued a clinical hold on further trials of its prostate cancer treatment.

Weatherford is down nearly -12% at $15.70. Volume is more than triple the daily average of 10.6 million shares traded. The oil field services company will restate prior earnings due to what the company calls “material weakness in internal controls over financial reporting for income taxes relating to current taxes payable, certain deferred tax assets and liabilities, reserves for uncertain tax positions, and current and deferred income tax expense.” Weatherford expects to take a charge for $225-$250 million for the years before 2010.

Paul Ausick

Filed under: 24/7 Wall St. Wire Tagged: CORT, GTXI, GURE, THLD, WFT

Top Analyst Upgrades & Downgrades (ADTN, AAP, APD, MT, ADP, BKU, BA, CATM, CSH, CVX, C, HGSI, LAMR, MA, RSH, SMG, UBS, VE, V, WFT, BRCM)

Administrator — Thu, 19 Jan 2012 13:14:47 +0000

These are some of the top analyst upgrades, downgrades, and initiations seen from Wall Street brokerage and research firms this Thursday morning.

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

Filed under: Analyst Calls Tagged: AAP, ADP,, ADTN, APD, BA, BKU, BRCM, C, CATM, CSH, CVX, HGSI, LAMR, MA, MT, RSH, SMG, UBS, V, VE, WFT

Top Analyst Upgrades & Downgrades (CELL, CSCO, DECK, DO, FTE, HTS, HWAY, HERO, LVS, LULU, MPEL, NRG, PM, SLB, SAH, STFC, VE, VRSN, WFT, YUM)

Administrator — Thu, 08 Dec 2011 13:21:30 +0000

These are some of the top analyst upgrades, downgrades, and initiations seen from Wall Street research calls this Thursday morning.

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.

JON C. OGG

Filed under: Analyst Calls Tagged: CELL, CSCO, DECK, DO, FTE, HERO, HTS, HWAY, LULU, LVS, MPEL, NRG, PM, SAH, SLB, STFC, VE, VRSN, WFT, YUM

Implied Gains in Oil Field Services Stocks May Not be Real (SLB, HAL, BHI, RIG, NOV, WFT)

Paul Ausick — Fri, 18 Nov 2011 19:01:10 +0000

Share prices for the oil field services companies dipped in late July shortly after many of the companies had posted new 52-week highs. The stocks have been struggling since then, primarily as a result of falling forecasts for global demand growth in 2012. Both the International Energy Agency and OPEC have been cutting growth estimates for next year based on continuing overall weakness in the global economy.

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

Filed under: Analyst Calls, Oil & Gas, Value Investing Tagged: BHI, HAL, NOV, RIG, SLB, WFT

Expected Upside Gains for Oil Field Services Companies (SLB, HAL, BHI, RIG, NOV, WFT)

Paul Ausick — Wed, 19 Oct 2011 17:36:23 +0000

Following last year’s disaster in the Gulf of Mexico, oil drillers and field services companies watched their shares fall more than -20% in most cases as prospects for exploration and production dropped. Stock prices have mostly recovered since then, with many shares posting 52-week highs this past summer. The recovery was largely a product of the expanded drilling onshore in the US for shale gas. The low price for natural gas has had little impact on the number of wells drilled because the E&P companies need to keep drilling in order to maintain their leases. Drilling for higher priced liquids in the Bakken shale in North Dakota and the Eagle Ford shale in south Texas have largely carried the new drilling along.Today we look target prices and prospects for six oil field services companies: Schlumberger Ltd. (NYSE: SLB), Halliburton Co. (NYSE: HAL), Baker Hughes Inc. (NYSE: BHI), Transocean Ltd. (NYSE: RIG), National Oilwell Varco Inc. (NYSE: NOV), and Weatherford International Inc. (NYSE: WFT). All data comes from Yahoo! Finance.

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

Filed under: Analyst Calls, Oil & Gas, Value Investing Tagged: BHI, HAL, NOV, RIG, SLB, WFT

The Best Value Stock in Oil Field Services (SLB, HAL, NOV, BHI, WFT)

Administrator — Tue, 13 Sep 2011 14:18:33 +0000

There are five companies that dominate the oil field services industry, and all have a market cap above $10 billion. The five are Schlumberger Ltd. (NYSE: SLB), Halliburton Co. (NYSE: HAL), National Oilwell Varco, Inc. (NYSE: NOV), Baker Hughes Inc. (NYSE: BHI), and Weatherford International Ltd. (NYSE: WFT).

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.

Filed under: Oil & Gas, Value Investing Tagged: BHI, HAL, NOV, SLB, WFT