HSBC latest to sing praises for Schlumberger, rally looks set to continue

Schlumberger's (SLB +0.2%) recent rally isn't likely to run out of gas anytime soon, HSBC says as it upgrades shares to Overweight from Neutral and raises its target price by $30 to $135 and sees significant medium-term gains "based on a strengthening earnings trajectory, and an improving financial returns and free cash flow profile."

Although SLB is flirting with new highs, its impressive growth track appears to justify further price appreciation; at its recent analyst day, SLB said it expects EPS to grow at an average annual rate of 17%-20% and is targeting a return on capital above 20%.

"The combination of attractive West Texas Intermediate [oil] prices, rising capital expenditure budgets, [and] strong rig/well count trends suggest we are in the sweet-spot of the oilfield services upcycle," Susquehanna analysts say.

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