- Schlumberger (SLB +2.4%) is on the move after being upgraded to Overweight from Equal Weight with a $93 price target, raised from $83, at Barclays, which believes that "no company has improved itself more during the downturn than SLB."
- Naming the company its top pick in the North America Oilfield Services & Equipment group, Barclays also expects SLB's international share to continue growing and its return on invested capital to expand the most among the group.
- But the firm also thinks a "scarcity premium" has evolved as investors have little to work with in the sector, as the offshore market is several years away from a recovery and liquidity issues are enveloping many of the small and mid caps.
- The firm views Halliburton (HAL +1.7%) as the "purest way to play the U.S. land recovery" but says "valuation looks a bit stretched post the BHI deal and is highly dependent on higher E&P spending."
- Barclays also upgrades Superior Energy (SPN +1.6%) to Overweight from Equal Weight and Dril-Quip (DRQ +0.3%) to Equal Weight from Underweight, and downgrades Hornbeck Offshore (HOS +3.6%) and National Oilwell Varco (NOV -1.2%) to Equal Weight from Overweight as well as Pacific Drilling (PACD -1.7%) to Underweight from Equal Weight.
- Now read Schlumberger shares soared by 20%, but with muted fundamentals