| From: Dennis Roth | 1/22/2008 8:34:06 AM | | | | | | Schlumberger, Ltd. (SLB): Lowering estimates and price target, but maintain Buy rating - Goldman Sachs - 01/21/08
What's changed
We lowered our 2008, 2009, and 2010 EPS estimates for Schlumberger by 8%, 6% and 4% to $4.80, $5.93, and $6.62 following the fourth quarter results. Our new estimates reflect a reduction in our margin assumptions due to weaker than expected pricing pressures in North America and modest adjustments to our international growth forecasts.
Implications
Schlumberger’s 4Q 2007 earnings miss and comments that 2008 would be a “transition year" is disappointing for the entire sector and calls into question revenue growth forecasts and margin assumptions for the oil services companies. With pricing pressures and competition looming in North America, we believe North American-exposed companies (HAL, BJS) may be at risk as they report over the next-few weeks. We do not see many catalysts for the sector in the near-term, even after the severe decline in valuation, and we believe macroeconomic concerns (US & global GDP growth) will most influence the sector’s performance over the next few months. Therefore, we remain Neutral on the group through earnings season. For SLB specifically, we believe its unmatched global presence positions it well to take advantage of the offshore rig cycle beginning in late 2008, the robust international land drilling market, and widening national oil company (NOC) project management opportunities. So, while 2008 may be a "transition year", 2009 and 2010 will not, and investors should use the stock’s weakness to begin building positions.
Valuation
We lowered our 12-month price target for SLB to $92 from $106 (19.2X 2008 EPS) to reflect our estimate revisions. SLB is trading at a 2008 P/E of 16.6X versus 12.7X for BHI and 10.8X for HAL.
Key risks
Weaker-than-expected global economic growth or lower-than-expected oil company spending internationally. |
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| From: Dennis Roth | 4/21/2008 8:30:25 AM | | | | | | Schlumberger, Ltd. (SLB): Reiterate Buy rating following 1Q; Raising price target to $110 - Goldman Sachs - April 21, 2008
What's changed
We reiterate our Buy rating on SLB and have raised our 12-month price target to $110 from $98, which is a midpoint between our “mid” and “high” trading values. Our new target reflects our increased confidence in 2008 estimates, accelerating growth in North America, and our view that SLB is best-positioned to capture the growth opportunities associated with new offshore rigs coming over the 2009-2011 timeframe. We also slightly adjusted our 2008-2010 EPS by -0.9%, +1.2% and +3.6%
Implications
While the 1Q results were $0.05 weaker than expected, SLB’s outlook was quite bullish as (1) stimulation pricing in North America is “definitively bottoming”, (2) pricing leverage appears to exist for other North American services, (3) 2009 revenue growth should be higher than 2008, and (4) SLB announced an $8 billion stock buyback by 2011. We expect a similar scenario of relatively lackluster 1Q results offset by bullish outlooks for several of the remaining services companies.
Admittedly, we are surprised by the consistent strength in the stocks, as this group has clearly experienced a re-valuation to higher multiples driven by
(1) rapidly increasing commodity prices,
(2) increased confidence in estimates, and
(3) less recession-driven uncertainty than other sectors.
The OSX now trades at a 21% premium to the S&P 500 versus a 9% discount only 4 weeks ago. Given the run, for the sector broadly, we would wait for a pullback rather than chase the rally.
Valuation
We raised our 12-month price target to $110 from $98 (18.3x 2009 EPS). SLB is trading at a 2009 P/E of 17.0x vs. 13.1x for BHI.
Key risks
WesternGeco sales were weak in 1Q due to timing delays and will likely be lumpy for the remainder of 2008. A pullback in oil prices is also a risk. |
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| From: newoe | 3/16/2010 11:55:39 AM | | | | | | SLB has an ongoing P/E ratio around 25, which indicates that it still has room to run up. The technical signs are positive.
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| From: JakeStraw | 8/26/2015 10:13:09 AM | | | | | | Schlumberger Limited to acquire Cameron International in a $14.4 billion deal in order to create an integrated system to lower oil and gas development costs.
fool.com |
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